The Board of Governors of the US Federal Reserve has given its approval to the UBS Group AG and Credit Suisse Bank deal. The US Fed informed about the development and said that it has given its approval to the UBS-Credit Suisse deal for the acquisition of the US subsidiaries of Credit Suisse by UBS Group AG. The US Fed went on to add that the UBS Group had sought its approval to the deal on March 22.
In this Swiss-brokered rescue deal, the US Fed’ board of Governors said, the UBS Group AG has committed to give an implementation plan to the US Federal Reserve for amalgamation of its American operations and business with Credit Suisse subsidiaries within three months of consummating the UBS-Credit Suisse deal.
This UBS-Credit Suisse investment banking deal will include more strong measures including liquidity standards for the bank, due to the increased size of the institution, the US Fed added.
As per the banks merger and acquisition law in the US, the US Federal Reserve 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-Credit Suisse deal — explained
The 167-year-old Credit Suisse Bank 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.
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 Credit Suisse UBS merger 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.
