ZURICH, Aug 11 — Swiss banking giant UBS voluntarily put an end today to the state and central bank support that smoothed its takeover of stricken Credit Suisse, saying they were no longer necessary.

UBS agreed to buy its rival in a 3-billion-franc (US$3.5 billion) fire sale hastily arranged over a March weekend by Swiss authorities afraid that a weakened Credit Suisse would go bankrupt.

UBS was granted up to 9 billion francs for protection against any losses incurred selling certain Credit Suisse assets, along with 100 billion Swiss francs in liquidity assistance provided by the Swiss National Bank (SNB).

These loans ensured that both banks had sufficient liquidity to carry out the takeover.

They also assured protection for UBS against the risk of extreme losses, the bank said in a statement today, as it had "very limited" time to study Credit Suisse's assets during takeover negotiations.

UBS has now concluded that the government support is no longer needed and asked for a "voluntary termination" of the agreements as of today.

UBS will pay 40 million francs in compensation for the measures.

The bank also announced that Credit Suisse had fully repaid the additional liquidity support loans granted by the central bank.

The measures taken by the central bank, state and financial regulators FINMA "were necessary due to the acute crisis of confidence at Credit Suisse," the SNB said in a statement today.

The liquidity assistance amounted to 168 billion francs, the SNB said, emphasising that it "has been repaid in full".

Too big to fail

Both UBS and Credit Suisse are among 30 international banks deemed too big to fail due to their importance in the global banking architecture.

But the collapse of three US regional lenders in March left Credit Suisse looking like the weakest link in the chain and its share price plunged more than 30 per cent on March 15.

The Swiss government feared Credit Suisse would have quickly defaulted and triggered a global banking crisis that would also have shredded Switzerland's reputation for sound banking.

"With the acquisition of Credit Suisse by UBS, a solution was found to secure financial stability and protect the Swiss economy in this exceptional situation," the SNB said.

Analyst Andreas Venditti of Vontobel Asset Management applauded the news of UBS ending its agreements, saying it would "calm the political debate around the potential 'danger'" the new megabank could pose for Switzerland.

The size of UBS following the merger, bigger than anything the country has seen before, has some politicians worried, fearing it could not be rescued if it too got into trouble.

Vontobel said there is still a long way to go but added that "management is executing its plan at full steam."

He said he hopes to see more details of those plans with the release of UBS's second quarter results, which have been postponed to the end of August due to the complexity of the merger. — AFP