UBS, Swiss Government Sign Loss Protection Agreement Over Credit Suisse

Editorial Staff

12 June 2023

and the Swiss government have signed a “Loss Protection Agreement” that sets out how the Swiss state guarantees loss of up to SFr9 billion ($9.96 billion) if realised on a designated portfolio of “non-core” assets once UBS bears the first SFr5 billion of any such losses.

The agreement is part of the process through which the Swiss state has backed UBS’s takeover of Credit Suisse, a move that has caused controversy such as through the write-down of SFr16 billion of Credit Suisse Additional Tier 1 bonds.

The pact takes effect when Credit Suisse’s completion is finished, and this is expected to be as soon as today, UBS said in a statement last Friday.

The agreement will remain in effect until the realisation of all assets covered by the guarantee, or until it is terminated by UBS, it said.

Referring to the “designated portfolio of Credit Suisse non-core assets,” UBS said it will manage these assets in a “prudent and diligent manner” and intends to minimise any losses and maximise value realisation on these assets.