UBS on Friday took the decision to sever the backstop the Swiss government gave to absorb Credit Suisse, a bet there are no hidden skeletons that will emerge that will hurt the bank in the way Countrywide’s acquisition dragged down Bank of America. UBS said it’s terminating a 9 billion franc loss ($10 billion) protection agreement with the Swiss government, and terminating its 100 billion franc public liquidity backstop with the Swiss National Bank, that went into effect the day its acquisition of Credit Suisse closed.
“At the time, this was deemed necessary to protect UBS against potential tail risks as there had been very limited time to review respective assets over the rescue weekend. After reviewing all assets covered by the [loss protection agreement] since the closing in June and taking the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required,” said UBS. UBS said it’s paying 40 million francs to the Swiss government for the loss protection agreement. Credit Suisse expensed a commitment fee and a risk premium of 214 million francs on the public liquidity backstop and paid a risk premium of 476 million francs on 50 billion franc emergency liquidity assistance plus loan that …
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“At the time, this was deemed necessary to protect UBS against potential tail risks as there had been very limited time to review respective assets over the rescue weekend. After reviewing all assets covered by the [loss protection agreement] since the closing in June and taking the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required,” said UBS. UBS said it’s paying 40 million francs to the Swiss government for the loss protection agreement. Credit Suisse expensed a commitment fee and a risk premium of 214 million francs on the public liquidity backstop and paid a risk premium of 476 million francs on 50 billion franc emergency liquidity assistance plus loan that …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]