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UBS and Swiss Government Sign Loss Protection Agreement for Credit Suisse Acquisition

Swiss authorities brokered a controversial UBS bailout for Credit Suisse over the weekend of March for 3 billion Swiss francs (about $3.37 billion).

Fabrice Coffrini | AFP | Getty Images

UBSMore And the Swiss government announced on Friday that it had signed a loss protection agreement. The agreement will come into force after the Swiss takeover. credit suisse Completed.

Under the rule, the Swiss government will compensate UBS for losses of up to 9 billion Swiss francs ($10 billion) after its acquisition of a former rival. This is guaranteed by the ‘designated portfolio of Credit Suisse non-core assets’ in the event that UBS suffers an initial loss of CHF 5 billion.

“The priority for the federal government and UBS is to minimize potential losses and risks in order to avoid reliance on federal guarantees as much as possible,” the Swiss government said in a statement.

The government facilitated the transaction to “protect financial stability and avoid damage to the Swiss economy”, but insured part of the losses caused by UBS “taking over an asset portfolio that is not compatible with its business.” We always agreed to do it,” he added. and risk profile. ”

In return, the agreement stipulates that UBS must help develop Switzerland’s status as a financial center after the acquisition. The bank has confirmed its intention to keep the combined group’s headquarters in Switzerland for the duration of the loss protection provisions.

“UBS intends to manage these assets in a prudent and diligent manner to minimize losses and maximize the value realization of these assets,” UBS said.

As of 10 a.m. London time, UBS Group shares were down 0.2%.

‘Shotgun wedding’

Last month, the bank disclosed The company had expected a financial hit of about $17 billion as a result of the acquisition of a rival company. “Shotgun wedding” This is to stabilize the Swiss financial system.

Swiss bank rivals $3.2 billion acquisition deal Early in the spring, at a time of more widespread volatility in the banking sector, collapse Of the three US banks. Credit Suisse shares plunged into early March longstanding scandalloss, and suspicion of mismanagement The problem came to a head when the largest shareholder, the Saudi National Bank, said it could no longer provide the bank with more cash due to regulatory restrictions.

The merger of two giant banks has sparked some controversy, infuriating Credit Suisse shareholders and bondholder just like growing up competitive concerns.

The bank expects the Credit Suisse acquisition to close as early as June 12.

Summarize this content to 100 words Swiss authorities brokered a controversial UBS bailout for Credit Suisse over the weekend of March for 3 billion Swiss francs (about $3.37 billion).Fabrice Coffrini | AFP | Getty ImagesUBSMore And the Swiss government announced on Friday that it had signed a loss protection agreement. The agreement will come into force after the Swiss takeover. credit suisse Completed.Under the rule, the Swiss government will compensate UBS for losses of up to 9 billion Swiss francs ($10 billion) after its acquisition of a former rival. This is guaranteed by the ‘designated portfolio of Credit Suisse non-core assets’ in the event that UBS suffers an initial loss of CHF 5 billion.”The priority for the federal government and UBS is to minimize potential losses and risks in order to avoid reliance on federal guarantees as much as possible,” the Swiss government said in a statement.The government facilitated the transaction to “protect financial stability and avoid damage to the Swiss economy”, but insured part of the losses caused by UBS “taking over an asset portfolio that is not compatible with its business.” We always agreed to do it,” he added. and risk profile. ”In return, the agreement stipulates that UBS must help develop Switzerland’s status as a financial center after the acquisition. The bank has confirmed its intention to keep the combined group’s headquarters in Switzerland for the duration of the loss protection provisions.”UBS intends to manage these assets in a prudent and diligent manner to minimize losses and maximize the value realization of these assets,” UBS said.As of 10 a.m. London time, UBS Group shares were down 0.2%.’Shotgun wedding’Last month, the bank disclosed The company had expected a financial hit of about $17 billion as a result of the acquisition of a rival company. “Shotgun wedding” This is to stabilize the Swiss financial system.Swiss bank rivals $3.2 billion acquisition deal Early in the spring, at a time of more widespread volatility in the banking sector, collapse Of the three US banks. Credit Suisse shares plunged into early March longstanding scandalloss, and suspicion of mismanagement The problem came to a head when the largest shareholder, the Saudi National Bank, said it could no longer provide the bank with more cash due to regulatory restrictions.The merger of two giant banks has sparked some controversy, infuriating Credit Suisse shareholders and bondholder just like growing up competitive concerns.The bank expects the Credit Suisse acquisition to close as early as June 12.
https://www.cnbc.com/2023/06/09/ubs-and-the-swiss-governmen-sign-loss-protection-agreement-over-credit-suisse-takeover.html UBS and Swiss Government Sign Loss Protection Agreement for Credit Suisse Acquisition

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