Swiss Government Props Up UBS with $60 billion

Swiss banking giant UBS and the Swiss National Bank Thursday forged an agreement to isolate $60 billion dollars of UBS’s illiquid securities and other assets into a separate fund entity set up by the government. Switzerland will take a 9.3 percent stake in UBS.

Assets transferred to the fund include nearly $31 billion of primary securities in U.S. subprime, Alt-A,  prime, and commercial real estate mortgage-backed securities, U.S. student loan auction rate certificates and other securities backed by student loans and U.S. reference-linked note programs.

The Swiss National Bank will loan up to $54 billion to the fund and UBS will contribute $6 billion. The national bank will also give UBS a direct cash infusion of about $5 billion.