- UBS has certainly terminated the Federal Government’s loss-absorbing guarantee contract of CHF9 billion and the contract with the Swiss National Bank on state-guaranteed liquidity assistance loans up to a maximum of CHF100 billion.
- This means that the federal government and taxpayers no longer bear any risk from these guarantees.
- The Federal Government also generates an income of around 200 million Swiss francs from guarantees.
From a financial point of view, the acquisition of CS by UBS by the federal government does not result in any loss. The big bank announced Friday morning that all of the emergency liquidity support based on the emergency law has been paid on March 19, 2023. The Swiss National Bank welcomes the fact that the liquidity support has been paid in full, as stated in a separate statement.
UBS made this decision on its own. But this separation is entirely in the interest of the union.
At the start of an information conference in Bern on Friday morning, Federal Chancellor Karin Keller-Sutter stated: “As of today, the federal government, and therefore the taxpayers, no longer takes any risks in terms of the state guarantee. This also makes the emergency law irrelevant.” UBS made the decision on its own, but “this termination is entirely in the best interest of the Union. I have also taken this up categorically in discussions with UBS ».
The Minister of Finance was relieved: in March it was not possible to know whether the plan would work, but Switzerland prevented a financial crisis with it. “But legal risks are still a matter of course.” The Federal Council will continue to try to keep the damage to the state and taxpayers as small as possible. “But I’m just being very honest: You can’t always control everything.”
With analytics, you will have to calmly decide what are the right steps in the future. The issue of supervision is certainly an important point. “We didn’t have a systemic crisis here, it was an internal crisis.” With a dig at those responsible for CS, Keller-Sutter says almost wryly: “decency can’t be regulated.”
In order to further enhance financial stability, the Federal Council also intends to submit a bill to Parliament to introduce the Public Liquidity Support System (PLB) into ordinary law. According to the Federal Ministry of Finance (FDF), work on a comprehensive assessment of the “too big to fail” set of rules also continues.
What does that mean for UBS now?
“For UBS, the CS takeover is still a prime site to build on – and this acquisition and the liquidation of the bank will keep UBS busy for a long time,” says Matthias Heim, business editor at SRF. “But one can certainly say that UBS seems more clear about the state of CS. It should also See today’s announcements against this background. Of course, they also give the bank more freedom – especially when it comes to CS Switzerland. It’s still not clear how to proceed here. You’ll find out how well UBS is doing financially at the end of the month when the bank publishes its business numbers for the half the first of the year.”
According to the UBS report, Credit Suisse also repaid the entire loan of CHF 50 billion to the Swiss Central Bank as of yesterday, August 10, 2023. CS paid a risk premium of CHF 476 million to the Swiss National Bank.
UBS sees the repayment as a milestone: “This underscores the strength of UBS and the efficiency demonstrated by the staff of both banks over the past few months,” Colm Kelleher, Chairman, and Sergio, CEO, said in a statement made available to Reuters by Armoti Staff.
The live broadcast of the media conference for reading
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