UBS and the Swiss government have signed a Loss Protection Agreement (LPA), which will go into effect once the acquisition of Credit Suisse is complete.
Until all of the assets protected by the guarantee are realised or until UBS terminates it, the agreement will be in service.
The Swiss Confederation’s Ordinance of March 19 2023, authorised the guarantee, which is specifically described in the LPA.
In accordance with the agreement, UBS will be responsible for the first CHF5bn ($5.5bn) of any realised losses while the Swiss government guarantees damages of up to CHF9bn should they be realised on a specified portfolio of Credit Suisse non-core assets.
UBS plans to minimise potential losses and maximise value realisation on these assets by managing them with caution and diligence.
Additionally, it will pay for the Confederation’s and FINMA’s initial and ongoing external expenses related to the LPA.
The registration statement, which covers the shares to be delivered, must be approved by the US Securities and Exchange Commission before completion may take place, and additional closing conditions must be satisfied or waived by UBS.
The New York Stock Exchange (NYSE) and SIX Swiss Exchange (SIX) will delist Credit Suisse shares and American Depositary Shares (ADS) once the process is complete.
In exchange for each 22.48 outstanding shares held by Credit Suisse shareholders, they will receive one UBS share.
Charges may apply for the trading of Credit Suisse ADS.
The debt securities that Credit Suisse Group was previously obligated to pay will now be owed by UBS Group.