Swiss banks raise emergency funds to fight financial crisis

Switzerland is taking a near 10 per cent stake in UBS as the Swiss bank and its rival Credit Suisse said yesterday they were raising billions of francs to shore them up against the financial crisis.

UBS AG is getting a six billion Swiss francs injection from the state in return for a 9.3 per cent shareholding, while Credit Suisse Group AG (CS) said it would raise 10 billion from outside investors including Qatar.

UBS will also unload €44.5 billion of toxic assets into a new fund backed by the Swiss National Bank.

Governments have been propping up their banks to avoid the credit crunch turning into a lengthy economic depression, while banks have been seeking funds to insulate themselves from the gathering crisis.

UBS, which has been more badly hit than its Swiss rival in the current crisis, said its foremost need was to cut exposure to illiquid assets and the creation of the new fund had laid the foundation for a return to its normal operating business.

By contrast Credit Suisse remained free of direct Swiss government assistance by raising about 10 billion francs from investors including the Qatar Investment Authority, already a major shareholder.