UBS and the Swiss government sign loss protection agreement over Credit Suisse takeover
UBS and the Swiss government announced Friday that they had signed a loss protection agreement which will come into effect once the takeover of Credit Suisse is completed
UBS and the Swiss government announced Friday that they had signed a loss protection agreement which will come into effect once the takeover of Credit Suisse is completed.
The agreement will see the Swiss government cover losses of up to 9 billion Swiss francs ($10 billion) following UBS' acquisition of its rival.
"As part of the agreement, the Swiss government guarantees losses of up to CHF 9bn if realized on a designated portfolio of Credit Suisse non-core assets once UBS bears the first CHF 5bn of any realized losses," UBS said in a statement.
"UBS will manage these assets in a prudent and diligent manner and intends to minimize any losses and maximize value realization on these assets."
The acquisition of Credit Suisse is expected to take place as early as June 12, UBS said.
It comes after the Swiss banking rivals agreed a $3.2 billion takeover deal in March amid volatility in the global banking sector, as three U.S. banks collapsed at the time.
Credit Suisse shares cratered through early March, with years of scandals, losses and alleged mismanagement coming to a head when its largest shareholder, the Saudi National Bank, said it was not able to provide any more cash to the bank because of regulatory restrictions.
The merger of the two banking juggernauts has been controversial in many quarters, enraging Credit Suisse shareholders and bondholders as well as raising competition concerns.
UBS Group shares were flat at 9:22 a.m. London time.
This story originally appeared on: CNBC - Author:Jenni Reid
