UBS voluntarily stops Credit Suisse's government and central bank protections

Aug. 11 (UPI) -- Swiss banking leader UBS on Friday ended a $10.27 billion loss protection agreement and a $114.1 billion liquidity backstop created by the Swiss government when the lender acquired Credit Suisse in the spring.

UBS said chose to end the protections after making a "comprehensive assessment" of its former rival's non-core assets covered by the agreement.

"The [loan protection agreement] would have covered a designated portfolio of Credit Suisse non-core assets," said a statement from UBS said. "At the time, this was deemed necessary to protect UBS against potential tail risks as there had been very limited time to review respective assets over the rescue weekend.

"After reviewing all assets covered by the LPA since the closing in June and taking the appropriate fair value adjustments, UBS has concluded that the LPA is no longer required."

Credit Suisse also repaid an emergency liquidity assistance plus loan of $57 billion from the Swiss National Bank.

USB took control of Credit Suisse in an emergency rescue deal for $3.42 billion, creating a banking and wealth management company worth$1.6 trillion. Confidence in Credit Suisse was in freefall after the collapse of two U.S. banks, the Silicon Valley Bank and Signature Bank.

The former Swiss banking giant acknowledged at the time there was "material weakness" in its bookkeeping earlier this year.

"UBS continues to focus on the successful execution of the integration of Credit Suisse," USB said.