Takeover of Credit Suisse by UBS: financial implications for the Confederation
On 16 and 19 March 2023, the Federal Council decided on various measures to prevent the imminent failure of Credit Suisse (CS), which is globally active and systemically important, and thereby avert a financial crisis and extremely severe damage to the Swiss financial centre and the entire economy. In the Federal Council's view, the package of measures around the takeover of Credit Suisse by UBS enabled this goal to be achieved under the prevailing circumstances, while keeping the cost for the state and taxpayers as low as possible. On 11 August 20023, UBS announced the termination of the federal loss protection guarantee without replacement. At the same time, it also terminated, without replacement, the agreement between Credit Suisse and the SNB on liquidity assistance loans with a federal default guarantee, following full repayment of these loans. The Confederation did not have to assume any losses arising from these guarantees. With the termination of these guarantees, the associated risks have also ceased to apply for the Confederation and taxpayers. Overall, the Confederation earned receipts of around CHF 200 million on the loss protection guarantee and liquidity assistance loans with a default guarantee.
Overview of receipts
Federal receipts and risk exposure with regard to liquidity loans and the loss protection guarantee
Definitive status as of 11 August 2023
Commitment premium of 0.25% p.a. for CHF 100 billion public liquidity backstop (PLB):
- Accrued premium (cumulative since 19 March 2023):
CHF 100.7 million
(transfer not until the termination of the loan agreement)
- Risk premium of 1.5% p.a. for effectively utilised public liquidity backstop (PLB):
Premium payments made (cumulative since 20 March 2023):
CHF 60.6 million
PLB: In addition to the commitment and risk premiums payable to the Confederation, Credit Suisse pays the SNB interest and a risk premium.
The other liquidity assistance provided by the SNB (without a state guarantee) is not mentioned here.
UBS loss protection agreement: guarantee fee
Status as of 11 August 2023
- Initial set-up fee:
CHF 20 mn (end September: second tranche of 20 mn)
- Annual maintenance fee of 0.4% applied to 9 billion, i.e. 36 million p.a. (from October 2023):
CHF 0
- Annual drawn portion fee of between 0% and 4% applied to 9 billion, contingent on the losses already realised and those still to be expected:
CHF 0
