The emergency ordinance and the transaction

Emergency law under Articles 184 and 185 of the Constitution

The legal architecture of the rescue rested on an ordinance of the Federal Council adopted on 16 March 2023 and amended on 19 March at 20.00 hours, while the press conference was still under way. Its full title describes its original purpose: the Ordinance on Additional Liquidity Assistance Loans and the Granting of Federal Default Guarantees for Liquidity Assistance Loans of the Swiss National Bank to Systemically Important Banks. It was published in the official compilation and is listed in the classified compilation of federal law as SR 952.3. The Federal Council based it directly on the Federal Constitution, namely on Article 184 paragraph 3, which allows it to issue ordinances when safeguarding the interests of the country so requires, and on Article 185 paragraph 3, which allows it to issue ordinances to counter existing or imminent serious disturbances of public order or internal or external security. The Federal Department of Finance explained that it had to rely on emergency law because ordinary law contained no framework for a public liquidity backstop.¹

The use of constitutional emergency powers in a banking crisis was not unprecedented. The rescue of UBS in October 2008, discussed in an earlier chapter, had also relied on them. The scale and the reach into private rights were new, however. The ordinance of 2023 did not merely authorise the Confederation to spend money. It also changed the ranking of creditors in bankruptcy, suspended central provisions of the Merger Act and, in its version of 19 March, empowered FINMA to order the write-down of subordinated bonds. Each of these features later required the courts to determine how far an emergency ordinance of the Federal Council may interfere with property and contractual rights without a basis in a statute adopted by Parliament.

ELA+ and the public liquidity backstop

The ordinance created two new forms of liquidity assistance beyond the SNB’s standing emergency liquidity assistance. The first, which became known as ELA+, consisted of additional liquidity assistance loans of the SNB without a federal guarantee. It was secured by a privilege in bankruptcy that ranked such loans in the second class under the Debt Enforcement and Bankruptcy Act, behind claims of employees and privileged deposits but ahead of all other claims. The second was a loan of the SNB secured by a federal default guarantee, the public liquidity backstop. It ranked behind the ELA+ loans but likewise ahead of ordinary creditors. The guarantee required an appropriation of the Federal Assembly, which under the emergency procedure of the Financial Budget Act could be approved in advance by the Finance Delegation of Parliament and ratified by the two chambers afterwards.²

The amounts were without precedent in Swiss history. The SNB could lend up to 100 billion francs under ELA+ without a federal guarantee, and the Confederation guaranteed public liquidity backstop loans of up to a further 100 billion francs.³ The actual drawings were lower but still enormous. Credit Suisse drew 20 billion francs under ELA+ on 17 March and a further 30 billion francs on 20 March, together with 70 billion francs under the public liquidity backstop on 20 March. Including the standing facilities, the SNB’s exposure reached a combined peak of 168 billion francs. The pricing reflected the risk. ELA+ and public liquidity backstop loans bore interest at the SNB policy rate plus 300 basis points, and the Confederation charged an additional commitment premium for its guarantee. Martin Schlegel, then Vice Chairman of the SNB’s Governing Board, later said that the central bank had reached its limits in accepting security in the form of a bankruptcy privilege. “We needed enough firepower to make it through the weekend”, he explained.⁴

The loans were repaid more quickly than many observers expected. Credit Suisse repaid the public liquidity backstop in full by the end of May 2023 and the ELA+ loans by 10 August 2023. Jordan nevertheless drew a clear line for the future. In his view ELA+ should not become part of the SNB’s regular set of instruments, while an effective public liquidity backstop for banks without sufficient collateral was essential.⁵ The legislative debate on a permanent backstop belongs to the following chapter.

The takeover: three billion francs in UBS shares

The commercial terms were set out in UBS’s announcement of 19 March. Credit Suisse shareholders were to receive one UBS share for every 22.48 Credit Suisse shares, which corresponded to 0.76 francs per share and a total consideration of three billion francs. The transaction was structured as an all-share merger and required no shareholder approval. UBS announced that the combined group would hold more than five trillion dollars of invested assets and expected annual cost reductions of more than eight billion dollars by 2027. Kelleher remained chairman and Ralph Hamers group chief executive.⁶ The price stood in stark contrast to the market valuation of the previous Friday. Credit Suisse shares had closed at 1.86 francs before the crisis weekend, so that shareholders received about forty per cent of the last market price.⁷ Only ten days after the announcement UBS replaced Hamers with Sergio Ermotti, who returned to the post he had held from 2011 to 2020 to lead the integration.⁸

The ordinance cleared the path for the transaction by departing from the Merger Act. Article 10a provided that the approval of the general meeting was not required if FINMA consented to the transaction. It also suspended the requirements for interim financial statements, a merger report, an audit of the merger documents and shareholders’ inspection rights, and allowed FINMA to waive further requirements where the special circumstances of the case so demanded.⁹ The deviation was significant because a general meeting convened to approve the merger would have taken weeks to organise and could have rejected terms that valued the bank at a fraction of its last market price. The Federal Supreme Court later held in a state liability case that the exclusion of shareholders’ participation rights had been necessary to ensure the speed and certainty that the crisis required.¹⁰ Because the merger was considered necessary for the protection of creditors, FINMA also took the place of the Competition Commission as merger control authority under Article 10 paragraph 3 of the Cartel Act. After receiving an opinion of the Commission dated 25 September 2023, FINMA closed the control procedure on 19 June 2024 without conditions.¹¹

The Confederation’s second commitment protected UBS against losses on part of the Credit Suisse portfolio. Under a loss protection agreement the Confederation guaranteed up to nine billion francs of losses on a defined portfolio of non-core assets, after UBS had borne the first five billion francs itself. UBS paid a set-up fee of 40 million francs for the guarantee. Together with the guarantee of the public liquidity backstop, the federal commitments amounted to 109 billion francs, the figure that later came before Parliament. For UBS the terms had further advantages. The write-down of the additional tier 1 instruments, discussed in the next section, strengthened the core capital of Credit Suisse before the merger. FINMA described this increase as part of its approval of the transaction.¹²

Variable remuneration and the limits of emergency measures

The rescue also reached into the remuneration of Credit Suisse employees. The Banking Act already allowed the Federal Council to take measures on remuneration where a systemically important bank received state aid from federal funds. On that basis the Federal Department of Finance ordered on 23 May 2023 that the outstanding variable remuneration of the top management level be cancelled, that of the second level cut by half and that of the third level by a quarter. In a pilot case brought by twelve former executives, the Federal Administrative Court held in May 2025 that the cuts had been unlawful. The variable remuneration had been a binding contractual claim, and the Banking Act allowed measures only for the duration of the state aid, which had ended on 11 August 2023. The court added that neither the department nor UBS had been able to show that any of the twelve managers had caused excessive risks. The Federal Department of Finance appealed, and in July 2025 the Federal Supreme Court suspended the payment of the bonuses until it had decided the case.¹³ The case illustrates a theme that recurs throughout the legal aftermath: measures that seemed politically self-evident in the heat of the crisis have had to be justified afterwards before courts that examine the legal basis with the ordinary rigour of administrative law.

Notes

1. Verordnung vom 16. März 2023 über zusätzliche Liquiditätshilfe-Darlehen und die Gewährung von Ausfallgarantien des Bundes für Liquiditätshilfe-Darlehen der Schweizerischen Nationalbank an systemrelevante Banken, SR 952.3, table of contents consulted via the bilingual compilation, https://www.droit-bilingue.ch/de-fr/9/95/952.3-index.html. The consolidated text is on Fedlex at https://www.fedlex.admin.ch/eli/cc/2023/135/de; Federal Department of Finance, “FAQ Credit Suisse” (cited above), section on the legal basis of the emergency law. ↩
2. Federal Council, text of the ordinance of 16 March 2023 in the version of 19 March 2023 at 20.00 hours, published as an attachment to the Federal Council’s media release, https://www.newsd.admin.ch/newsd/message/attachments/76270.pdf, Articles 2 to 4. Article 4 made the guarantee subject to conditions of public interest, necessity and solvency, including the requirement that the borrower had exhausted its own sources of liquidity; Ordinance text (cited above), Article 5. ↩
3. Federal Department of Finance, “UBS takeover of Credit Suisse”, https://www.efd.admin.ch/en/credit-suisse-en. ↩
4. French, Heaphy and Kelly (cited above), for the drawings, the pricing and Schlegel’s statements. The peak of 168 billion francs also appears in Thomas J. Jordan’s speech of 1 November 2023 (cited above). ↩
5. UBS Group AG, “UBS Group AG Voluntarily Terminates Loss Protection Agreement and Public Liquidity Backstop Guaranteed by Swiss Government and Credit Suisse AG Fully Repaid ELA+ Loan”, 11 August 2023, https://www.businesswire.com/news/home/20230810941131/en/. UBS reported a risk premium of 476 million francs paid to the SNB on the ELA+ loans; Jordan, speech of 1 November 2023 (cited above). ↩
6. UBS Group AG, “UBS to acquire Credit Suisse”, media release of 19 March 2023, https://www.ubs.com/global/en/media/display-page-ndp/en-20230319-tree.html. UBS also referred to downside protection and to access to the SNB’s liquidity facilities for both banks. ↩
7. finews.ch, “Gutachten zum CS-Wert könnte für UBS teuer werden”, 24 June 2025, https://www.finews.ch/news/banken/68152-cs-klage-ubs-aktionaere-gutachten-handelsgericht. The article gives the value of 0.76 francs per share against 1.86 francs before the weekend. ↩
8. UBS Group AG, “Sergio P. Ermotti named Group Chief Executive Officer”, ad hoc announcement of 29 March 2023, https://www.ubs.com/global/en/media/display-page-ndp/en-20230329-change.html. The appointment took effect on 5 April 2023. The release notes that Ermotti had previously been Group Chief Executive Officer for nine years and that Ralph Hamers would remain as an adviser during a transition period. ↩
9. Ordinance text (cited above), Article 10a. ↩
10. IFLR, “Swiss Supreme Court dismisses another state liability claim after Credit Suisse–UBS merger”, https://www.iflr.com/article/2gxqhaww0g5y23jaxb3ls/sponsored/swiss-supreme-court-dismisses-another-state-liability-claim-after-credit-suisse-ubs-merger. The article discusses decision 2E_5/2024 and refers to an earlier decision 2E_1/2024 of May 2025. ↩
11. Competition Commission (WEKO), “Stellungnahme der WEKO gemäss Artikel 10 Abs. 3 KG und Empfehlungen gemäss Artikel 45 Abs. 2 KG”, 25 September 2023, https://www.weko.admin.ch/dam/de/sd-web/LwrDNMeHdUJA/zusammenschlussvorhaben_ubs_cs_stellungnahme_vom_25_september_2023.pdf; FINMA, “Zusammenschluss von UBS und CS: FINMA schliesst Kontrollverfahren ab”, press release of 19 June 2024, https://www.finma.ch/de/news/2024/06/20240619-mm-zusammenschluss-ubs-cs/. FINMA found that the merger did not eliminate effective competition in any market segment. ↩
12. Federal Department of Finance, “UBS takeover of Credit Suisse” (cited above); FINMA, press release of 19 March 2023 (cited above). ↩
13. SRF, “Bonuskürzungen für CS-Kader waren rechtswidrig”, 13 May 2025, https://www.srf.ch/news/schweiz/nach-cs-untergang-bonuskuerzungen-fuer-cs-kader-waren-rechtswidrig. The article refers to Article 10a of the Banking Act as the legal basis, gives the percentages of the cuts ordered on 23 May 2023 and mentions about 1,000 employees affected; SRF, “Boni-Auszahlungen für frühere CS-Kader wegen Verfahren gestoppt”, 10 July 2025, https://www.srf.ch/news/schweiz/bundesgericht-boni-auszahlungen-fuer-fruehere-cs-kader-wegen-verfahren-gestoppt. The court noted that civil or arbitration proceedings on the bonuses might otherwise produce conflicting results. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.