UBS – Credit Suisse Merger Gets Approval from US Fed

The U.S. Federal Reserve Board of Governors have given their nod for the UBS Group AG and Credit Suisse Bank deal. The Fed has informed its decision about the latest positive development and noted that it had approved the UBS-Credit Suisse deal for the acquisition of the US subsidiaries of Credit Suisse by the UBS Group AG.

UBS – Credit Suisse Merger Gets Approval

The Swiss brokerage firm UBS rescue act on Credit Suisse amidst the ongoing banking sector crisis comes in as a big relief for the Switzerland-based global investment bank.

Yesterday, the Fed added that as a part of the deal, UBS will provide the U.S. Central Bank with an implementation plan for combing the US businesses of the two firms. The plan will be updated quarterly, and it will include UBS's obligations to comply with more stringent enhanced prudential standards.

Fed Board of Governors said that the UBS has committed to giving an implementation plan to the US Federal Reserve for the amalgamation of its American operations and business with the Swiss group's subsidiaries within three months of consummating the UBS-Credit Suisse deal.

The deal will include stronger measures - liquidity standards for the bank, owing to its increased size, the Fed added.

The Merger and Acquisition law in the United States of America requires the U.S. Central Bank to conduct a review of bank mergers when the bank's total assets exceed $250 billion, and purchases any voting shares of a company with assets of $10 billion or more.

Last month, the Swiss-based Credit Suisse Bank history of the 167-year-old firm which came to the brink of collapse after a slump in its shares and bonds intensified fears about a global banking crisis. UBS Group AG, a Zurich-based rival, approached the rescue with a merger plan engineered and bankrolled by the Swiss authorities, as per a Reuters report.

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

UBS says that it expects the deal to create a business with over $5 trillion in total invested assets. As per the takeover deal, the holders of Credit Suisse AT1 bonds will get nothing. On the other hand, the shareholders, who generally rank below the bondholders will receive $3.23 billion in terms of compensation.

Apart from securing approval for the merger deal from the U.S. Fed, the UBS has secured temporary approval from the European Union antitrust regulators, as it is yet to seek clearance under the EU merger rules. Meanwhile, the Bank of England has approved the takeover in the United Kingdom as per the Reuters report.