FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS. The Swiss National Bank (SNB) and the Swiss Confederation will provide additional liquidity to carry out the takeover. Both banks will be able to continue all their business activities with no restrictions or interruptions. Additionally, the Swiss Federal Council has acknowledged that the Federal Department of Finance (FDF) is temporarily suspending the already granted but deferred variable remuneration for Credit Suisse employees by means of an order to the bank. The Federal Council also instructed the FDF to propose further measures on variable remuneration for the financial years up to 2022 and thereafter.
The Credit Suisse Group was experiencing a crisis of confidence, which has manifested in considerable outflows of client funds. This was intensified by the upheavals in the U.S. banking market in March 2023. In order to stabilize the situation, FINMA took several measures such as investigated whether the statements give rise to indications of a violation of financial market law, which must be clarified within the framework of supervisory proceedings, released a statement highlighting no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the U.S. banking market, and also confirmed that Credit Suisse meets the higher capital and liquidity requirements applicable to systemically important banks. Despite these measures, FINMA was unable to restore the confidence in the bank. There was a risk of the bank becoming illiquid, even if it remained solvent, and it was necessary for the authorities to take action in order to prevent serious damage to the Swiss and international financial markets. As a result, FINMA approved the takeover of Credit Suisse by UBS to protect depositors and the financial markets.
The takeover will result in a larger bank, for which the current regulations require higher capital buffers. FINMA will grant appropriate transitional periods for these to be built up. FINMA will very closely monitor the transaction and compliance with all requirements under supervisory law. To ensure that all obligations can continue to be met at all times throughout the transaction, further liquidity assistance will be assured. The liquidity provided by SNB will include a loan covered by a federal guarantee, while the Swiss Confederation will also provide guarantees for potential losses of certain assets that UBS will acquire as part of the transaction, if these losses exceed a specific threshold.
Related Links
Keywords: Europe, Switzerland, Banking, Basel, Regulatory Capital, Liquidity Risk, Credit Risk, Credit Suisse, UBS, Variable Remuneration, Swiss Federal Council, FINMA, SNB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
German Regulators Publish Reporting and Regulatory UpdatesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
