UBS is planning not to use the CHF 9bn (£7.9bn) funding the Swiss government had agreed to help with in the rescue sale of Credit Suisse in March, according to reports.
In early June, UBS agreed a deal with the Swiss government to provide the bank with up to CHF9bn to protect it against losses accrued during its takeover of Credit Suisse, as long as the company bore the first CHF 5bn (£4.4bn).
However, people familiar with the plans told the Financial Times UBS will avoid using the loss protection facility following political backlash, especially in the run up to the Swiss national elections in October.
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The bank is expected to announce in its Q2 2023 results next month it will not utilise the government incentive.
Besides political backlash, UBS executives have grown confident losses from the Credit Suisse takeover will not exceed the CHF 5bn threshold, meaning they likely will not need to use taxpayer funding.
One person familiar with the matter told the FT that UBS's intention was to only tap into the CFH 9bn funding in the event of a big credit crisis and markets collapse.
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"There is a clear intention by UBS's management team not to go into the SFr9bn, only if there is a big credit crisis and markets collapse," they said. "But under normal operations and market conditions, there should be a scenario where they do not use the second loss tranche," they said.
Following the acquisition of Credit Suisse, UBS stopped its $6bn share buyback programme, but the bank is expected to restart it in a bid to close its valuation gap with its US peers.
UBS has been contacted for comment.
