The Swiss government will give UBS, the country's largest bank, a capital injection of 6 billion Swiss francs ($5.3 billion) in the form of mandatory convertible notes.
"The Federal Council is confident that this package of measures will contribute to the lasting strengthening of the Swiss financial system,'' the government said today in a statement."The resulting stabilization is beneficial for overall economic development in
UBS's extra capital, if converted into shares at a price of 20 francs, would give the Swiss government a 9 percent stake in the European bank with the largest write downs in the credit crisis. The plan doesn't make the government a co-owner and leaves it an option to withdraw during the loan, it added.
In a separate statement, the Swiss National Bank created a special purpose vehicle for the orderly liquidation of illiquid assets, allowing UBS to transfer troubled assets of up to $60 billion.