UBS GR.+0.77%
UBS, Swiss gov't ink loss guarantee agreement
The Swiss government will grant the UBS Group coverage of up to 9 billion Swiss francs (~$10 billion) in losses that may result from the Credit Suisse's asset takeover, the government announced on Friday, just days before UBS' planned aquistion of the embattled bank.
"The priority for the federal government and UBS is to minimise potential losses and risks so that recourse to the federal guarantee is avoided to the greatest extent possible," the Swiss government said in a separate statement.
Under the agreement, UBS will be responsible for covering initial losses up to a maximum of 5 billion Swiss francs, with the government bearing losses exceeding this amount. However, the Swiss bank will be obliged to pay a guarantee premium to the government, an upfront fee of 40 million francs, and an annual maintenance fee of 0.4%.