Federal Reserve green lights UBS-Credit Suisse deal in US
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After years of scandal and losses, 167-year-old Credit Suisse came to the brink of collapse before Zurich-based rival UBS rode to the rescue.
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NEW YORK - The Federal Reserve’s Board of Governors on Friday said it has approved UBS Group’s acquisition of the US subsidiaries of Credit Suisse, clearing another major hurdle for the completion of the Swiss-brokered rescue deal.
UBS has committed to give the US central bank an implementation plan for combining its US business and operations with those of Credit Suisse within three months of consummating the deal, the Fed’s Board said in a statement.
The plan will include more stringent requirements including liquidity standards for the bank, due to the increased size of the institution, the statement said.
The US central bank is required to conduct a review of bank mergers that would create an institution with total assets of more than US$250 billion (S$330 billion).
After years of scandal and losses, 167-year-old Credit Suisse came to the brink of collapse before Zurich-based rival UBS rode to the rescue with a merger engineered and bankrolled by the Swiss authorities
The Swiss authorities and UBS Group have been racing to close the takeover of Credit Suisse Group within as little as a month, in an effort to retain the lender’s clients and employees, Reuters previously reported.
UBS secured a temporary approval from European Union antitrust regulators earlier this month but still needs to seek clearance under EU merger rules. The Bank of England has approved the takeover in the United Kingdom, people familiar with the process told Reuters.
UBS has said it expects the deal to create a business with more than US$5 trillion in total invested assets.
Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive US$3.23 billion.
The Fed subjects firms with more than US$700 billion in assets, or more than US$75 billion in cross-jurisdictional activities, to heightened supervision, including annual company-run stress tests and increased liquidity standards. REUTERS
