UBS’s $10 bln state guarantee is a useful fantasy

Credit Suisse AG

07/06/2023 09:12

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Liam Proud
       LONDON, June 7 (Reuters Breakingviews) - The bank is
getting Swiss taxpayers to shield it
against some losses on its Credit Suisse deal. It allows the
government to smooth a controversial takeover, and helps UBS
boost a stretched capital ratio. Both sides are making a
calculated bet that the backstop is never needed.
    Full view will be published shortly.
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    CONTEXT NEWS
    UBS expects to finalise a deal with the Swiss government to
cover up to 9 billion Swiss francs ($9.9 billion) of losses from
its emergency takeover of Credit Suisse by June 7, the Swiss
bank said in a regulatory filing published on June 6. 
    The guarantee would only kick in after UBS has swallowed 5
billion Swiss francs ($6 billion) of losses. 
    “UBS Group AG expects that the Loss Protection Agreement
will be finalized by June 7, 2023,” a filing with the U.S.
Securities and Exchange Commission said. 
    The government agreement is one of the final hurdles UBS
needs to clear before it can officially close the acquisition of
its smaller rival. The bank said on June 5 it expected to seal
the takeover as early as June 12.

 (Editing by Neil Unmack and Oliver Taslic)
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