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cash. [1/2] A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. REUTERS/Denis BalibouseSummaryCompaniesGuarantees takes effect after UBS losses hit 5 bln francsUBS, government say priority is to minimise lossesAgreement runs until realisation of Credit Suisse assetsUBS obliged to keep HQ in SwitzerlandFees and costs attached to loss protection agreementZURICH, June 9 Reuters - UBS and the Swiss government agreed on Friday how they will share losses linked to the bank's emergency takeover of Credit Suisse, clearing the way for the deal to close within days, and creating a giant Swiss bank and cementing its position as a global wealth the deal, negotiated since Credit Suisse's rescue in March, the government will guarantee up to 9 billion Swiss francs $ billion of losses UBS may incur from the sale of its rival's assets beyond 5 billion francs the lender is due to cover comes with various conditions, including the bank's commitment to keeps its headquarters in Switzerland, the government said in a loss protection agreement will become effective with the completion of the Credit Suisse takeover, expected as early as June 12, UBS said in a separate chief executive Sergio Ermotti, hinted later that the bank was, in fact, on track to finalise the transaction on Monday."From Monday we will be new colleagues," Ermotti told the Swiss Economic Forum in state money will not come for free, with UBS having to pay various set up and maintenance fees, as well as premiums on any money cash was made available by the government to facilitate the emergency takeover of Credit Suisse and avoid a broader banking crisis that a collapse of the lender could agreement will cover a portfolio of Credit Suisse assets that were difficult to assess in the few days the banks had to hash out a deal and which are not needed as part of the future core business of government said the guarantee covered assets with a volume of around 44 billion Swiss francs, an equivalent of about 3% of the combined assets of the merged group, mainly made of derivatives, loans, legacy assets and structured of the losses are expected to be made available during the third quarter of 2023, the government said, while their scale was "highly dependent on the actual wind-down of the assets concerned and market developments.""Consequently, it is not yet possible to estimate the probability of the guarantee being drawn and the amount involved," the government IT, NOT USE ITThe government's and UBS's priority was to "minimise potential losses and risks so that recourse to the federal guarantee is avoided to the greatest extent possible," it said in the has said UBS leadership would do everything possible to prevent Swiss taxpayers from bearing the costs of the analyst Andreas Venditti estimated that based on the size of the portfolio covered by the guarantee losses could come at the low end of his earlier 5-10 billion franc forecast, suggesting UBS could cover them without taxpayers' shares were broadly steady in afternoon bank said it would manage the assets in a "prudent and diligent manner."The government pointed out the agreement did not mention any federal participation in losses above the total agreed 14 billion francs because that would require "a legal basis as well a parliamentary approval of a corresponding guarantee credit."A person familiar with the matter said UBS had been able to have a good look at Credit Suisse's books and was confident the amount agreed was sufficient, with the bank's level of confidence having increased since the takeover was agreement will remain in place until the final realisation of the Credit Suisse assets, the government that the combined bank - with a balance sheet of $ trillion, roughly double the size of the Swiss economy - would be too big for Switzerland, led the country's Social Democrats to propose radically shrinking UBS have also been calls for UBS to keep Credit Suisse's Swiss operation as a separate entity, to ensure competition and preserve the legacy of the 167-year-old loss protection agreement is among the final hurdles UBS needed to clear before it can officially finalise the biggest banking deal since the global financial crisis.$1 = Swiss francsReporting by Noele Illien and John Revill Editing by Tomasz JanowskiOur Standards The Thomson Reuters Trust Principles.
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