Takeover of CS – In brief: Keller-Sutter to dissolve the UBS guarantees – News

  • UBS has definitely ended the contract on the federal government’s loss absorption guarantee of CHF 9 billion and the contract with the Swiss National Bank (SNB) on state-guaranteed liquidity assistance loans of a maximum of CHF 100 billion.
  • This means that the federal government and taxpayers no longer bear any risks from these guarantees, as the Federal Department of Finance (FDF) writes in a statement.
  • The federal government also generates income of around CHF 200 million from the guarantees.
  • Finance Minister Karin Keller-Sutter informed at 9 a.m. in Bern. We report on the media conference here in the live stream and in the ticker.

From a financial point of view, the takeover of CS by UBS does not result in any loss for the federal government. All of the extraordinary liquidity support based on emergency law on March 19, 2023 had been repaid, the big bank announced on Friday morning. The SNB welcomes the fact that the liquidity support has been fully repaid, as it writes in a separate statement.

What does that mean for UBS now?


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SRF business editor Matthias Heim puts it this way: “For UBS, the takeover of CS is still a major construction site – this takeover and the liquidation of the bank will keep UBS busy for a long time. But one can certainly say that UBS seems to have more clarity about the state of CS. Today’s announcements should also be seen against this background. Of course, they also give the bank more freedom – especially when it comes to CS Switzerland. It is still unclear how to proceed here. You will find out how well UBS is doing financially at the end of the month when the bank publishes its business figures for the first half of the year.”

According to the UBS report, Credit Suisse also fully repaid the CHF 50 billion loan to the SNB as of yesterday, August 10, 2023. CS paid a risk premium of CHF 476 million to the SNB.

UBS sees the repayment as a milestone: “This underscores the strength of UBS and the competence that the employees of both banks have demonstrated over the past few months,” said Colm Kelleher, Chairman of the Board of Directors, and Sergio, CEO, in a statement available to Reuters Ermotti to the employees.

Bank Vontobel sees the news as positive


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Vontobel analyst Andreas Venditti expects that the political debate about a potential danger of the new UBS for Switzerland – which has gotten worse in the past two months – should calm down. In addition, the voluntary termination of the guarantees follows the positive news about the settlement in the Archegos case at the end of July. Overall, there is still a long way to go before the new bank, but the management is implementing the plan at full speed. There should be more clarity about the development with the quarterly figures at the end of the month.

In order to further promote financial stability, the Federal Council also intends to submit a bill to Parliament for the introduction of a Public Liquidity Backstop (PLB) in ordinary law. According to the FDF, work on the overall evaluation of the “too big to fail” set of rules also continued.

UBS shares are expected to start trading with gains on Friday. At around 8.20 a.m., UBS stocks gained 0.90 percent in pre-market trading from Julius Baer to an average price of 19.58 francs. However, the market as a whole is likely to start somewhat lower, with the SMI being estimated at a slight minus of 0.26 percent.

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