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UBS Ends Loss Protection & Public Liquidity Backstop Agreements
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UBS Group AG (UBS - Free Report) announced the voluntary termination of its Loss Protection Agreement (LPA) with the Swiss government valued at CHF 9 billion. The company has also decided to conclude Public Liquidity Backstop (PLB) of up to CHF 100 billion with Swiss National Bank ("SNB"), which was guaranteed by the Swiss government.
Additionally, in an attempt to restore financial stability, Emergency Liquidity Assistance Plus (ELA+) loan was fully repaid by Credit Suisse as of Aug 10, 2023.
UBS acquired Credit Suisse in an emergency takeover involving government-backed efforts to fend off panic in the global banking system in March, 2023. It was assumed that UBS would likely face potential losses upon realization of a portfolio of certain hard-to-value-assets of Credit Suisse.
As a result, the Swiss government entered into LPA with UBS. covering losses up to CHF 9 billion after UBS had borne up to CHF 5 billion of Credit Suisse’s losses. This agreement came into effect from Jun 12, 2023.
Now, following a comprehensive assessment of Credit Suisse’s designated portfolio of non-core assets involving stress tests with certain severe loss scenarios, UBS has decided to voluntarily cease LPA. Hence, it gave notice for the same which is scheduled to be effective from Aug 11, 2023.
Additionally, it paid CHF 40 million to compensate Swiss Confederation with respect to the establishment of LPA.
As part of the acquisition, PLB was set up by the Swiss government of an amount up to CHF 100 billion, allowing SNB to provide liquidity assistance to Credit Suisse, backed by a federal default guarantee. All loans under PLB were fully repaid by Credit Suisse by May-end. This, along with considering the overall funding situation, UBS decided to voluntarily end PLB agreement also. The same will be effective from Aug 11, 2023.
UBS has been focusing on successful integration of Credit Suisse since its takeover. The measure will provide financial stabilization of Credit Suisse.
UBS Group AG’s shares have gained 1.1% on the NYSE over the past six months against the industry’s decline of 0.2%.
Last month, LPLFinancial Holdings (LPLA - Free Report) announced a definitive agreement to acquire the wealth management business of Crown Capital Securities, L.P. The deal marked a significant step for both companies and is expected to be finalized in early 2024, pending regulatory approval and customary closing conditions.
LPLA's industry-leading platform is expected to provide Crown Capital advisors with enhanced operational support, streamlined processes and access to cutting-edge technology and integrated advisor tools. While Crown Capital advisors will enjoy the benefits of LPL Financial's robust infrastructure, they will maintain their independence, continuing to serve clients with same dedication and commitment they have exhibited throughout the years.
Affiliated Managers Group, Inc. (AMG - Free Report) announced a deal to acquire a minority equity interest in Forbion Group Holding B.V. The terms of the deal, expected to close in the second half of 2023, were not disclosed.
Being a venture capital and growth equity firm with €3 billion in assets under management, Forbion focuses on investing in high-quality life sciences companies across all stages of their development.
AMG, with its strong balance sheet and liquidity position, has considerable capability to invest in other companies and generate growth through new investments.
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UBS Ends Loss Protection & Public Liquidity Backstop Agreements
UBS Group AG (UBS - Free Report) announced the voluntary termination of its Loss Protection Agreement (LPA) with the Swiss government valued at CHF 9 billion. The company has also decided to conclude Public Liquidity Backstop (PLB) of up to CHF 100 billion with Swiss National Bank ("SNB"), which was guaranteed by the Swiss government.
Additionally, in an attempt to restore financial stability, Emergency Liquidity Assistance Plus (ELA+) loan was fully repaid by Credit Suisse as of Aug 10, 2023.
UBS acquired Credit Suisse in an emergency takeover involving government-backed efforts to fend off panic in the global banking system in March, 2023. It was assumed that UBS would likely face potential losses upon realization of a portfolio of certain hard-to-value-assets of Credit Suisse.
As a result, the Swiss government entered into LPA with UBS. covering losses up to CHF 9 billion after UBS had borne up to CHF 5 billion of Credit Suisse’s losses. This agreement came into effect from Jun 12, 2023.
Now, following a comprehensive assessment of Credit Suisse’s designated portfolio of non-core assets involving stress tests with certain severe loss scenarios, UBS has decided to voluntarily cease LPA. Hence, it gave notice for the same which is scheduled to be effective from Aug 11, 2023.
Additionally, it paid CHF 40 million to compensate Swiss Confederation with respect to the establishment of LPA.
As part of the acquisition, PLB was set up by the Swiss government of an amount up to CHF 100 billion, allowing SNB to provide liquidity assistance to Credit Suisse, backed by a federal default guarantee. All loans under PLB were fully repaid by Credit Suisse by May-end. This, along with considering the overall funding situation, UBS decided to voluntarily end PLB agreement also. The same will be effective from Aug 11, 2023.
UBS has been focusing on successful integration of Credit Suisse since its takeover. The measure will provide financial stabilization of Credit Suisse.
UBS Group AG’s shares have gained 1.1% on the NYSE over the past six months against the industry’s decline of 0.2%.
Image Source: Zacks Investment Research
UBS carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Efforts by Other Firms
Last month, LPL Financial Holdings (LPLA - Free Report) announced a definitive agreement to acquire the wealth management business of Crown Capital Securities, L.P. The deal marked a significant step for both companies and is expected to be finalized in early 2024, pending regulatory approval and customary closing conditions.
LPLA's industry-leading platform is expected to provide Crown Capital advisors with enhanced operational support, streamlined processes and access to cutting-edge technology and integrated advisor tools. While Crown Capital advisors will enjoy the benefits of LPL Financial's robust infrastructure, they will maintain their independence, continuing to serve clients with same dedication and commitment they have exhibited throughout the years.
Affiliated Managers Group, Inc. (AMG - Free Report) announced a deal to acquire a minority equity interest in Forbion Group Holding B.V. The terms of the deal, expected to close in the second half of 2023, were not disclosed.
Being a venture capital and growth equity firm with €3 billion in assets under management, Forbion focuses on investing in high-quality life sciences companies across all stages of their development.
AMG, with its strong balance sheet and liquidity position, has considerable capability to invest in other companies and generate growth through new investments.