Under the terms of the agreement, UBS will pay $1.435bn to settle all civil claims brought by the Department of Justice in connection with UBS’ heritage RMBS business in the US.
Previously, the settlement was completely provisioned.
Furthermore, UBS announced its intention to end the CHF9bn ($10.2bn) Loss Protection Agreement (LPA) with the Swiss government.
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 aid 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.