(Tiper Stock Exchange) – UBS Group announced the decision of voluntarily terminate the Loss Protection Agreement (LPA) from CHF 9 billion with the Swiss government following a comprehensive assessment of the designated portfolio of non-core assets of Credit Suisse, including severe stress loss scenarios. Furthermore, having duly considered the financing situation of the Credit Suisse entities and the UBS Group in general, it has also decided to voluntarily terminate the Public Liquidity Backstop (PLB) with the Swiss National Bank (SNB) up to CHF 100 billion, guaranteed by the Swiss government.
Furthermore, Credit Suisse has entirely repaid the Emergency Liquidity Assistance Plus loan (ELA+). These measures, together with the intervention of UBS, contributed to the stabilization of Credit Suisse and to financial stability in Switzerland and worldwide.
As part of UBS’s Credit Suisse bailout, the Swiss government entered into an LPA with UBS, which took effect upon closing on June 12, 2023. The LPA was to cover losses of up to CHF 9 billion (only after UBS had taken over the first CHF 5 billion of losses). The LPA would have hedged a designated portfolio of Credit Suisse’s non-core assets. At the time, this was deemed necessary to protect UBS from potential tail risks, as there was very limited time during the bailout weekend to review each other’s businesses. After reviewing all assets covered by the LPA since the June closing and making the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required. Therefore, UBS has served voluntary termination effective August 11, 2023. UBS pays a total of CHF 40 million to compensate the Swiss Confederation for the establishment of the LPA.
Furthermore, as part of the rescue operation, the Swiss government set up the PLB on 19 March 2023 in the amount of up to 100 billion francs. It enabled the SNB to provide sufficient liquidity support to Credit Suisse, backed by a federal default guarantee. All loans under the PLB have been repaid in full by Credit Suisse as of the end of May 2023. Following a thorough analysis of the funding situation, UBS has decided to voluntarily terminate the PLB agreement with the SNB effective from August 11, 2023. Until July 31, 2023, Credit Suisse charged a comission of commitment and a risk premium totaling CHF 214 millionof which approximately CHF 61 million to the SNB and CHF 153 million to the Swiss Confederation.
Credit Suisse also repaid the CHF 50 billion ELA+ loan to the SNB effective August 10, 2023. Credit Suisse paid the SNB an risk premium totaling CHF 476 million.