Swiss join bank rescue programme
Switzerland followed other countries today by announcing it would inject billions into its banking system.
The main recipient will be UBS AG, which is being offered up to £26bn (€33.2bn) so that it can part with securities that have gone bad since the start of the worldwide financial crisis.
Switzerland’s largest bank, which racked up losses and writedowns totalling about £20bn (€25.5bn) over the past year, will also receive around £2.5bn (€3.19bn) in return for mandatory convertible bonds.
The measures will allow UBS to dispose of high-risk assets linked to the US subprime market by handing them over to a specially-created vehicle whose sole purpose is to sell them off.
The vehicle will be controlled by the Swiss National Bank but managed by UBS, and any profit will be shared equally between the two.
As part of a package to support the banking sector, the government said it will also raise private customers’ bank deposit guarantee limit above the current £13,000 (€16,600). The exact level has yet to be determined.
Meanwhile, UBS rival Credit Suisse said it had also been offered government assistance but would not make use of it, choosing instead to raise money on the open market.
