UBS ends Swiss govt guarantees in Credit Suisse deal, stock rises 5%

UBS (NYSE:UBS) stock price gained 4.9% in the early hours of Friday as the bank voluntarily terminated the CHF 9B ($10.3B) loss protection guarantee extended by the Swiss government after an assessment of Credit Suisse’s non-core assets and stress loss scenarios.

As part of the government-brokered takeover of Credit Suisse, UBS (UBS) was offered a loss protection deal to cover any losses realized when winding down Credit Suisse’s assets.

After reviewing all assets once the Credit Suisse takeover was complete, UBS (UBS) decided it no longer required the guarantee as well as the CHF 100B ($114.1B) public liquidity backstop, as all loans under the PLB were fully repaid by Credit Suisse.

“Credit Suisse has also paid back the Emergency Liquidity Assistance Plus loan of CHF 50B (~$57B) to the Swiss National Bank,” said UBS (UBS). “Credit Suisse paid a risk premium totaling CHF 476M ($543.2M) to the SNB.”

“The Confederation did not have to assume any losses arising from these guarantees,” the Swiss government said in a statement. “With the termination of these guarantees, the associated financial risks have also ceased to apply for the Confederation and taxpayers.”

“The Confederation earned receipts of around CHF 200M ($228.1M) on the guarantees,” it added.

More on UBS-Credit Suisse backstory:

• UBS aims to skip $10B backstop from Swiss govt for Credit Suisse deal

• UBS agrees to pay nearly $400M to settle Credit Suisse’s Archegos missteps

• UBS, Swiss govt sign loss protection pact for Credit Suisse acquisition