The Federal Reserve has given the green light to UBS Group AG's acquisition of Credit Suisse's US subsidiaries, allowing the Swiss-brokered deal to proceed in the US. The approval was granted on Friday, and UBS has committed to providing an implementation plan for merging its US business and operations with Credit Suisse's. The plan will include more stringent requirements, including liquidity standards for the bank due to the increased size of the institution.
The acquisition is a result of a shotgun merger that was orchestrated and bankrolled by the Swiss authorities. UBS agreed to buy Credit Suisse for $3.3 billion, a fraction of its earlier market value. The deal is expected to create a business with more than $5 trillion in total invested assets. Shareholders of Credit Suisse will receive $3.23 billion, while holders of Credit Suisse AT1 bonds will not receive anything. The acquisition will subject UBS to heightened supervision by the Fed, including annual company-run stress tests and increased liquidity standards.
The approval of UBS's application by the Fed is a significant milestone for the merger between the two banks, especially after years of scandal and losses that left Credit Suisse on the brink of collapse. The acquisition is also a testament to the role of the Swiss authorities in engineering and bankrolling the shotgun merger. The deal is expected to create a more stable and robust financial institution, with UBS committing to more stringent requirements that will ensure the bank is adequately capitalized and has sufficient liquidity. The acquisition is expected to have a significant impact on the US financial sector, with the combined entity having a significant presence in the US market.
