Federal Reserve green lights UBS-Credit Suisse deal in US

[April 15, 2023]  By Hannah Lang, Chris Prentice and Ann Saphir

(Reuters) - The Federal Reserve's Board of Governors on Friday said it has approved UBS Group AG's acquisition of the U.S. subsidiaries of Credit Suisse, clearing another major hurdle for the completion of the Swiss-brokered rescue deal.

UBS has committed to give the U.S. central bank an implementation plan for combining its U.S. 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 U.S. central bank is required to conduct a review of bank mergers when a bank with more than $250 billion of total assets purchases any voting shares of a company with assets of $10 billion or more.

UBS had requested the Fed's approval of the merger March 22, the Fed said.

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 last month. UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion), a fraction of its earlier market value.

The Swiss authorities and UBS Group AG have been racing to close the takeover of Credit Suisse Group AG within as little as a month, in an effort to retain the lender's clients and employees, Reuters previously reported.

Logos of Swiss bank UBS and Credit Suisse in Zurich, Switzerland March 20, 2023. REUTERS/Denis Balibouse

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 $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 $3.23 billion.

The Fed subjects firms with more than $700 billion in assets, or more than $75 billion in cross-jurisdictional activities, to heightened supervision, including annual company-run stress tests and increased liquidity standards.

(Reporting by Chris Prentice, Hannah Lang and Ann Saphir; Editing by Dan Burns, Paul Simao and Diane Craft)

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