UBS and Credit Suisse Get Urgent Bailout Funds
PARIS — As the financial crisis continued to roll through world markets, the two leading Swiss banks said Thursday they had secured emergency support totaling some $14.1 billion, either from the Swiss authorities or from outside investors, including the Qatar Investment Authority.
UBS said it would receive a direct injection of government money worth some $5.3 billion, while Credit Suisse said it had raised $8.8 billion from “a small group of major global investors” including the Qatari authorities. The government injection of funds into UBS could represent a 9 percent stake in the bank, whose $44 billion write-downs related to toxic assets have been Europe’s worst.
Credit Suisse also reported a net third quarter loss of $1.3 billion after further write-downs.
Additionally, the Swiss National Bank said it had created a fund that would enable UBS, the country’s biggest bank, to transfer $60 billion worth of toxic assets from its balance sheet. UBS said the fund would be capitalized with $6 billion of equity capital provided by UBS and $54 billion from the Swiss National Bank.
UBS said in a statement: “With this transaction, UBS caps future potential losses from these assets, secures their long-term funding, reduces its risk-weighted assets and materially de-risks and reduces its balance sheet.”
For its part, the Swiss government said in separate statement that it was “confident that this package of measures will contribute to the lasting strengthening of the Swiss financial system.”
“The resulting stabilization is beneficial for overall economic development in Switzerland and is in the interests of the country as a whole,” the statement said.
Previously, the Swiss authorities had seemed to be standing apart from the wave of bailouts among European countries, who have pledged around $1.8 trillion to free up credit markets and support the continent’s banking system. But such is the size of the Swiss banking industry in relation to the overall economy that the Swiss might not have had the resources to bail out UBS and Credit Suisse if they ran into deep trouble.



