UBS will have access to Swiss liquidity to manage Credit Suisse debt

By Devika Patel

Knoxville, Tenn., March 21 – UBS Group AG plans to acquire Credit Suisse in an all-share deal under which UBS will have access to significant liquidity from Swiss authorities with which to handle Credit Suisse’s debt.

UBS benefits from CHF 25 billion of downside protection from the transaction to support marks, purchase price adjustments and restructuring costs and additional 50% downside protection on non-core assets.

Both banks have unrestricted access to the Swiss National Bank existing facilities, through which they can obtain liquidity from the Swiss National Bank.

“The debt [of Credit Suisse] was, of course, considered, so we didn’t, of course, just do the assets we did the liabilities as we look through all of it and, so, when we think about on the total, it is in that context that we gave you the comfort that the amount of excess capital that it served to us is putting us in a very good position to absorb that and be very, very well positioned,” chief financial officer Sarah M. Youngwood said on the company’s conference call announcing the acquisition on Monday.

“So, in terms of the debt, of course, the fact that there is the access to the liquidity and the very significant liquidity that was provided by the Swiss authorities is also very helpful,” she said.

Credit Suisse shareholders will receive one UBS share for every 22.48 Credit Suisse shares held, equivalent to CHF 0.76 per share for a total consideration of CHF 3 billion.

The investment bank and financial services company is based in Zurich and Basel, Switzerland.

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