Furthermore, after careful examination of the funding situation of Credit Suisse businesses and the UBS Group as a whole, UBS has chosen to solely withdraw the Swiss National Bank’s (SNB) Public Liquidity Backstop (PLB) of up to CHF100bn, which is guaranteed by the Swiss government.
Credit Suisse has also completely returned the Emergency Liquidity Assistance Plus (ELA+) loan.
These measures, along with UBS’ assistance, helped to stabilise Credit Suisse and financial stability in Switzerland and worldwide.
The Swiss government and UBS signed an LPA as part of the Credit Suisse rescue deal, and it took effect on June 12 2023, when the deal closed.
The LPA was designed to pay for losses up to CHF9bn (although it could only be used after UBS had assumed the first CHF5bn in liabilities).
An assigned portfolio of non-core assets from Credit Suisse would have been covered by the LPA.
Due to the short amount of time available to assess each asset over the rescue weekend, this was at the time believed vital to protect UBS from any tail risks.
Following an assessment of all assets covered by the LPA since the close in June and the application of the necessary fair value adjustments, UBS has determined that the LPA is no longer necessary.
As a result, UBS has provided notice of voluntary dismissal, which will take effect on August 11, 2023.
The Swiss Confederation receives a total payment from UBS of CHF40m as compensation for the LPA’s establishment.
Additionally, on March 19, 2023, the Swiss government established the PLB with a cap of CHF100bn as a component of the rescue transaction.
It enabled the SNB to offer Credit Suisse enough liquidity support, supported by a federal default guarantee.
From May 2023, Credit Suisse had completely paid off all loans made under the PLB.
After carefully examining the funding situation, UBS has made a voluntary choice to end the PLB arrangement with the SNB as of August 11, 2023.
Credit Suisse incurred commitment fees and risk premiums totalling CHF214m through July 31 2023, including roughly CHF61m for the Swiss National Bank and CHF153m for the Swiss Confederation.
As of August 10, 2023, Credit Suisse AG also repaid the ELA+ loan of CHF50bn to SNB.
The SNB received a risk premium from Credit Suisse of CHF476m.
UBS remains focused on the effective integration of Credit Suisse.