Home News Switzerland pumps billions to rescue banks

Switzerland pumps billions to rescue banks

Published on 16/10/2008

16 October 2008

BERN — Switzerland followed the lead of other European countries and the United States on Thursday by announcing it would support its banking system with billions of dollars.

The main recipient will be UBS AG, which is being offered up to CHF 54 billion 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 CHF 45 billion over the past year, will also receive CHF 6 billion from the government in return for mandatory convertible bonds.

The government said the support package would also include raising account holder protection for customers of all Swiss banks above the current threshold of CHF 30,000.

UBS rival Credit Suisse said it had also been offered government assistance but would not make use of it at this time, choosing instead to raise about CHF 10 billion on the open market. The largest amount would come from the Qatar Investment Authority, a government-controlled fund, it said.

While Switzerland’s No 2 bank has been less affected by the global financial turmoil, it said it expected to report losses of CHF 1.3 billion for the third quarter of the year.

Meanwhile, UBS said it expected to report a profit of almost CHF 300 million for the period – it’s first since the second quarter of 2007.

UBS and Credit Suisse shares fell 7.8 percent and 6.1 percent, respectively, on the Swiss stock exchange Thursday.

[AP / Expatica]