Credit Suisse and UBS could benefit from more than 260 billion Swiss francs ($280 billion) in State and central bank support, a third of the country’s Gross Domestic Product (GDP). The huge amount of financial support is a part of the banks’ merger deal that was announced on Sunday to buffer Switzerland against global financial turmoil, documents outlining the terms of the deal show. 

UBS has said that it will pay $3.2 billion for the 167-year-old flagship, while the government has said that UBS will also take on the first $5.4 billion in losses from unwinding derivatives and other risky assets. 

The deal, however, involves a large amount of public support, with three tranches of liquidity and loans, as well as a pledge from the Swiss government to absorb up to 9 billion francs in potential losses from the takeover. 

The total of 259 billion francs of support is equivalent to a third of Switzerland’s entire economic output, which stood at 771 billion francs last year. Credit Suisse on Monday saw its shares close by 55.74 per cent lower at 0.82 Swiss francs apiece, slightly above the UBS’ purchase price. 

“The government’s going to have to tell voters why they are putting citizens’ money, taxpayers’ money at risk to bail out a bank that was predominantly servicing the ultra-wealthy, doing some pretty extraordinary things with its investment bank and paying people crazy amounts of money relative to what the man in the street gets paid,” a former global bank chief executive, who did not wish to be identified, has said. 

Credit Suisse has been the biggest name ensnared in global market turmoil unleashed by the recent collapse of US lenders Silicon Valley Bank and Signature Bank.