Why UBS Shares Are Trading Higher Today

UBS Group AG UBS shares are trading higher after the company said it no longer required the Swiss government's loss protection and liquidity backstop agreements.

The company disclosed the voluntary termination of the Loss Protection Agreement (LPA) with the Swiss government worth CHF 9 billion ($10.3 billion) and CHF 100 billion Public Liquidity Backstop with the Swiss National Bank (SNB), effective August 11, 2023.

In June, UBS inked a loss protection agreement with the Swiss government, as per which UBS was supposed to handle potential losses of the first CHF 5 billion, and if the amount exceeds, the Swiss government would have covered losses of the next CHF 9 billion related to the Credit Suisse takeover. 

UBS plans to pay a total of CHF 40 million to compensate the Swiss Confederation for the creation of the LPA.

Also, Credit Suisse has fully repaid the Emergency Liquidity Assistance Plus (ELA+) loan of CHF 50 billion to Swiss National Bank.

In total, Credit Suisse paid a risk premium totaling CHF 476 million to the SNB.

Also Read: Credit Suisse To Cut 80% Of Hong Kong Investment Bank Jobs: Report

Price Action: UBS shares are trading up 4.44% at $23.10 on the last check Friday.