UBS Group AG (NYSE:UBS) has decided to end an agreement with the Swiss government to cover losses it could incur from the rescue of Credit Suisse Group AG (NYSE:CS).
The Swiss bank on Friday said that it would voluntarily terminate the loss protection agreement (LPA), as well as a 100 billion Swiss francs (SFR) liquidity lifeline from the Swiss National Bank, effective immediately.
“After reviewing all assets covered by the LPA since the closing in June and taking the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required,” the bank said in a statement.
Under the terms, UBS was to assume the first SFR5 billion of losses, with the government stepping up to take on the next SFR9 billion.
The portfolio of assets covered primarily loans, derivatives, legacy assets and structured products from Credit Suisse’s non-core unit.
The support had helped facilitate the takeover brokered by the government in March as Credit Suisse hurtled towards bankruptcy.