After CS recovery: Federal government and UBS contract for loss guarantee

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A major hurdle to the historic takeover has been overcome: UBS and the federal government have signed the loss guarantee agreement resulting from the takeover of Credit Suisse by UBS. The Federal Ministry of Finance (FDF) and UBS announced the signing of the contract on Friday.

The contract sets out when the federal government’s CHF 9 billion financial guarantee will apply in the event of any loss resulting from the sale of Credit Suisse assets.

The FDF writes that there are strict requirements for federal warranty. UBS is responsible for managing assets in a way that minimizes losses and maximizes realization returns. The federal government has extensive information and control rights. And: The bank’s headquarters must be in Switzerland.

Ultimate goal: keeping risks small for taxpayers

UBS is also required to establish a separate organizational unit and set up an oversight committee that will report quarterly to the Confederation. The primary goal is to keep the financial and legal risks to the federal government and taxpayers as small as possible.

UBS is looking to take over CS on Monday, June 12, as announced earlier this week. According to the FDF, the federal government’s loss guarantee is required to make the takeover possible. Losses from realization of CS assets come into effect when they exceed CHF 5 billion and are limited to CHF 9 billion. (oco/SDA)

Source :Blick