UBS said Friday that it’s signed a loss protection agreement with the Swiss government covering up to 9 billion francs ($10 billion) of losses once the takeover of Credit Suisse is completed.
The finalized deal sets the stage for the merger of the Swiss banks to be completed as early as June 12.
Terms call for the guarantee to only be implemented if UBS takes 5 billion francs of losses from what are called non-core assets of Credit Suisse.
The protection applies to roughly 3% of the combined assets of the merged bank. UBS is paying the Swiss government an upfront fee of 40 million francs, as well as an annual maintenance fee of 0.4% and a risk premium depending on how much of the guarantee is used. UBS does have the right to terminate the guarantee at any time.
The per-share value of the UBS offer
UBS,
UBSG,
has climbed slightly since the deal was first announced, as it’s now worth 0.81 francs per share, valuing Credit Suisse at 3.2 billion francs, or $3.6 billion.
UBS agreed to buy its rival for an initially announced 3 billion francs after Credit Suisse
CS,
CSGN,
was unable to stem outflows from its wealthy clients.
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