In a surprise move, Swiss investment bank UBS Group AG (NYSE: UBS) officially terminated the Swiss government loss protection guarantees of CHF 9 billion ($10.3 billion) associated with its previous deal involving Credit Suisse Group AG. Shares of UBS were up in trading on Thursday.
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This loss protection guarantee was part of the deal brokered by the Swiss government to cover any losses realized as UBS was winding down Credit Suisse’s assets. As the takeover of Credit Suisse is now complete, UBS has decided it no longer needs the guarantee, and the CHF 100 billion ($114.1 billion) of the Swiss government’s public liquidity backstop, as all the loans under this backstop were fully repaid by Credit Suisse.
The Swiss government commented, “The Confederation did not have to assume any losses arising from these guarantees. 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 200 million ($228.1 million) on the guarantees.”
Analysts are cautiously optimistic about UBS stock, with a Moderate Buy consensus rating based on seven Buys, four Holds, and one Sell.