The Swiss government and taxpayers will no longer bear any risks from guarantees made to preserve financial stability after the collapse of Credit Suisse.
On Friday UBS voluntarily terminated the loss guarantee agreement with the Swiss government and the Swiss National Bank (SNB).
The agreement will terminate with immediate effect, as UBS says it no longer need the CHF9 billion ($10.2 billion) guarantee. But the government said that it still intended to submit a bill to parliament to introduce a public liquidity backstop under ordinary law and is still conducting a comprehensive review of too-big-to-fail regulatory framework.
The contract was officially signed on June 9, when the Swiss government earmarked CHF9 billion of taxpayer funds to plug potential losses arising from the UBS takeover of Credit Suisse.
These measures were created under an emergency law, to facilitate the takeover brokered by the government in March as Credit Suisse hurtled toward bankruptcy. Under the terms, UBS was to assume the first CHF5 billion of losses, with the government stepping up to take on the next CHF9 billion.
But, "all extraordinary liquidity assistance based on the emergency law of March 19 has been repaid”, UBS said in a statement. Credit Suisse has also fully repaid the loans of CHF50 billion to the SNB as of August 10, the bank continues.
The finance ministry added that the guarantees have not resulted in any losses for the government, but rather brought around CHF200 million in revenues.
In total, UBS paid some CHF730 million in commitment fees and risk premiums to Swiss authorities, made up of CHF200 million to the government and CHF530 million to the SNB.