UBS and Credit Suisse Bailed Out

Remember when Credit Suisse was patting itself on the back for dodging all that subprime mess? No more. CS didn’t get a bailout, per se, but it did have to raise emergency capital.

Hairball UBS, of course, needs a rescue. And Switzerland is setting up its own TARP.

NYT:  [T]he two leading Swiss banks said Thursday they had secured emergency support totalling some $14.1 billion, either from the Swiss authorities or from outside investors including the Qatar Investment Authority.

At the same time, the Swiss National Bank said it had set up a fund to absorb toxic assets from the country’s biggest bank, UBS. The measures offered a sharp contrast to Switzerland’s previous appearance of aloofness from Europe’s government-sponsored rescue operations…

UBS said it would receive a direct injection of government money in the form of mandatory convertible notes worth some $5.3 billion while Credit Suisse, the second largest Swiss bank, said it had raised $8.8 billion from “a small group of major global investors” including the Qatari authorities, which already hold a significant stake. The government injection of funds into UBS could represent a 9percent stake in the bank, whose $44 billion writedowns related to toxic assets have been Europe’s worst.

Credit Suisse also reported a net third quarter loss of $1.3 billion after further writedowns. UBS reported third-quarter net income of $261 million.

The Swiss National Bank said it had created a fund that would enable UBS to transfer $60 billion worth of toxic assets from its balance sheet. UBS said the fund would be capitalised with $6 billion of equity capital provided by UBS and $54 billion from the Swiss National Bank.

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