Business Context and Reporting Period
This Form 6-K, filed on August 11, 2023, by UBS Group AG, reports an ad hoc announcement regarding the voluntary termination of emergency liquidity and loss protection measures established during the March 2023 acquisition of Credit Suisse AG. The filing details the stabilization of Credit Suisse and the repayment of government-backed emergency loans.
Key Financial Metrics and Liquidity
- Loss Protection Agreement (LPA): UBS voluntarily terminated the CHF 9 billion LPA with the Swiss government. UBS paid a total of CHF 40 million to compensate the Swiss Confederation for the establishment of the LPA.
- Public Liquidity Backstop (PLB): UBS voluntarily terminated the PLB of up to CHF 100 billion with the Swiss National Bank (SNB). All loans under the PLB were fully repaid by Credit Suisse as of the end of May 2023.
- PLB Costs: Through July 31, 2023, Credit Suisse expensed a commitment fee and risk premium totaling CHF 214 million (approximately CHF 61 million to the SNB and CHF 153 million to the Swiss Confederation).
- Emergency Liquidity Assistance Plus (ELA+): Credit Suisse fully repaid the CHF 50 billion ELA+ loan to the SNB as of August 10, 2023. A risk premium totaling CHF 476 million was paid to the SNB.
Material Changes
The primary material change is the complete removal of extraordinary liquidity measures based on emergency law put in place on March 19, 2023. Following a comprehensive assessment of the designated portfolio of Credit Suisse non-core assets and severe stress loss scenarios, UBS concluded that the LPA was no longer required. Additionally, the funding situation of Credit Suisse entities and UBS Group overall allowed for the termination of the PLB and the full repayment of the ELA+ loan.
Outlook and Management Commentary
Management stated that these measures, combined with UBS's intervention, contributed to the stabilization of Credit Suisse and financial stability in Switzerland and globally. UBS continues to focus on the successful execution of the integration of Credit Suisse. The filing includes standard forward-looking statement disclaimers, noting that actual results may differ materially from expectations due to various risks and uncertainties.
Investor Verification Checklist
- Confirm the effective date of the LPA and PLB terminations (August 11, 2023).
- Verify the total costs incurred for the LPA (CHF 40 million) and PLB/ELA+ fees (CHF 214 million and CHF 476 million respectively).
- Review the status of the Credit Suisse non-core asset portfolio to understand the basis for terminating the loss protection.
- Monitor subsequent filings for updates on the integration progress and any remaining contingent liabilities.