 Switzerland: UBS Capital Injection, 2008Anmol Makhija ()
Journal of Financial Crises, 2024, vol. 6, issue 3, 487-507 Abstract: UBS, the eighth-largest bank in the world and the largest bank in Switzerland in 2008, incurred write-downs totaling USD 50 billion during the Global Financial Crisis, mostly on exposures to securities linked to US subprime mortgages. On October 16, 2008, the Swiss Federal Council announced that the government would subscribe to CHF 6 billion (USD 5.3 billion) of mandatory convertible notes (MCNs) issued by UBS to restore confidence in the bank and the financial system. UBS agreed to use the government's capital to fund the equity for a special purpose vehicle, StabFund, that the central bank created to take over and manage UBS's most troubled assets. In August 2009, the government converted the MCNs to UBS common shares and sold the shares to institutional investors for CHF 5.5 billion. The government also waived the right to receive coupon payments on the MCNs in exchange for CHF 1.8 billion. The Swiss government, therefore, received approximately CHF 7.2 billion when it sold its entire stake in UBS. In November 2013, UBS paid USD 3.8 billion to the SNB to purchase StabFund. The SNB also gained interest income of USD 1.6 billion on a loan it made to StabFund. Keywords: capital injection; Global Financial Crisis; Switzerland; UBS (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:v:6:y:2024:i:3:p:487-507 Access Statistics for this article More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC. |
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