UBS said that it would no longer rely on Swiss government assistance tied to its emergency takeover of Credit Suisse in March, the Wall Street Journal reported. The Swiss bank said that it terminated a roughly $10 billion government backstop that had limited its potential losses on some Credit Suisse assets. UBS also exited emergency liquidity lines the country’s central bank had provided to keep Credit Suisse afloat. UBS bought Credit Suisse after the latter came close to collapsing as customers pulled deposits.
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Switzerland
The number of company insolvencies in Switzerland rose 22% in the first six months of the year compared to the same period in 2021, SwissInfo.com. Some 581 construction firms went bankrupt between January and the end of June, out of 2,822 companies in all sectors, according to research group Dunn & Bradstreet. The financial and service sector industries saw one of the largest percentage rises in bankruptcies with a 31% increase in businesses going bust. Some 30% more hotels and restaurants also went out of business.
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A committee that reviews disputes in the credit default swaps (CDS) market said on Monday that UBS is the sole successor to Credit Suisse Group following the merger of the two banks, Reuters reported. This means that Credit Suisse will no longer be the reference entity for its outstanding CDS, which are a type of insurance against holding risky debt. Instead, UBS will become the new reference entity, with the effective date being June 12, when the merger was completed. An investor noted that the decision was widely expected and therefore should not have any major market impact.
FTX filed a lawsuit on Wednesday against former managers of a Swiss business the bankrupt cryptocurrency exchange had acquired, looking to claw back at least $323 million to repay creditors and customers, WSJ Pro Bankruptcy reported. The lawsuit filed in the U.S.
The Swiss National Bank raised its policy interest rate by 25 basis points on Thursday as the central bank pressed ahead with its campaign to dampen stubborn inflation and signalled that more tightening was likely to come, Reuters reported. Chairman Thomas Jordan pointed to rising inflationary pressures and the danger of price increases becoming entrenched as the SNB hiked Swiss rates for the fifth time in succession. Although Swiss inflation ebbed to 2.2% in May from 2.6% in April, there was still more work to be done to tackle rising prices, Jordan told reporters.
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The Swiss National Bank (SNB) on Thursday said it was crucial to draw lessons from the Credit Suisse crisis that led to the bank's downfall and forced rescue by rival UBS and consider measures that would prevent such events in the future, Reuters reported. "These measures need to strengthen banks’ resilience in order to prevent a loss of confidence wherever possible, and ensure a broad range of effective options to stabilise, recover or wind down a systemically important bank in the event of a crisis," the central bank said in its 2023 financial stability report.
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Spain's BBVA and Bank of Cyprus reopened the market with the issuance of the first euro-denominated contingent convertible bonds (CoCo) since the rescue of Credit Suisse in March, in what is seen as an attempt to restore confidence in the banks' riskiest debt instruments, Reuters reported. The Spanish bank said it aimed to raise between 750 million euros ($810.08 million) and 1 billion euros with this issuance. According to a lead manager memo seen by Reuters, the issuance had already received orders worth over 3 billion euros.
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A committee that reviews disputes in the credit default swaps (CDS) market said on Monday that it had been asked to address a question of whether there is a successor to Credit Suisse Group, Reuters reported. This comes on the day that UBS completed its emergency takeover of embattled local rival Credit Suisse, creating a giant Swiss bank with a balance sheet of $1.6 trillion and greater muscle in wealth management. The CDS panel said on its website it has accepted the question by an investor and it will meet on Tuesday at 13:00 GMT to discuss it.
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Swiss National Bank Chairman Thomas Jordan repeated his commitment to fight "stubborn" inflation on Thursday in his final public appearance before the central bank announces its next interest rate decision, Reuters reported. Swiss annual inflation dipped to 2.2% in May, government data showed on Monday, but has remained above the 0-2% range targeted by the SNB since February 2022. "It is really important to get inflation down to the level of price stability," Jordan told the Swiss Economic Forum, which took place in Interlaken. "Inflation remains very stubborn," he said.
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Switzerland's UBS said Monday that it expects to complete its takeover of longtime rival Credit Suisse as early as next week, the Associated Press reported. The two Zurich-based banks are uniting in a 3 billion-franc ($3.3 billion) deal that was arranged hastily in March by the Swiss government and regulators after Credit Suisse’s stock plunged and jittery depositors quickly pulled out their money. The merger was aimed at stemming upheaval in the global financial system after the collapse of two U.S. banks shook confidence in the sector.
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