UBS agrees Swiss bail-out plan

Switzerland’s UBS today became the latest banking giant to agree a multi-billion government bail-out.

The firm is transferring $60bn (€44.53bn) in toxic debts to a fund owned by the Swiss National Bank (SNB).

UBS will be putting up $6bn(€4.45bn) to absorb any losses on the “assets”, although the fund will be financed by a $54bn (€40bn) (£31bn) loan from the SNB.

The move came as rival Credit Suisse announced plans to boost its balance sheet by 10 billion Swiss francs (€6.54bn) without the need of government aid.

UBS chief executive Marcel Rohner said the move de-risked the bank’s balance sheet and “gives comfort in UBS’s future”.

The rescue will allow UBS to rid itself of unwanted investments hit by the crunch such mortgage-backed bonds, sub-prime debt and bonds backed by student loans.

UBS will have the option of buying back its stake in the fund when the SNB loan - repayable in eight to 12 years – has been settled.