UBS calls four nations ‘slow’ on Credit Suisse approval

UBS has encountered regulatory delays in at least four countries, including South Korea, India, Ireland, and Saudi Arabia, hampering the bank’s efforts to complete its takeover of Credit Suisse. An internal document dated September 6, reviewed by Reuters, revealed these challenges and raised concerns about uncooperative regulators potentially jeopardising the merger and other integration deals.

The document, compiled by UBS after a global regulatory assessment for the integration of Credit Suisse, outlined that “a single non-cooperative regulator can jeopardise the timeline of the parent bank merger and other transactions,” impacting the broader integration process. UBS noted that such uncertainties could lead to the winding down of businesses and asset sales, particularly when dealing with “difficult jurisdictions or regulators.”

Credit Suisse, Switzerland’s second-largest bank, faced several years of scandals and losses before being rescued by UBS in a state-engineered takeover in March. While the takeover was completed in June, regulatory approvals from countries where both banks operate are still required for the full legal completion – a process that could face delays due to uncooperative regulators.

UBS acknowledged the complexities of the regulatory process and expressed gratitude for the support it has received thus far in its integration efforts.

Large-scale mergers and acquisitions often encounter delays related to the numerous regulatory approvals required, with some transactions occasionally derailed by regulatory objections.

UBS’s integration of Credit Suisse represents a significant opportunity and risk for the bank, given the nature of this historic merger. Last month, UBS projected the completion of the takeover in 2024, while the internal document suggested it could conclude as early as May next year.

The document highlighted specific timelines for regulatory approvals in certain countries. For instance, in South Korea, the process could take 18 to 22 months to obtain new licences, while Ireland may require up to two years, and Saudi Arabia up to 12 months. India’s regulator might take a minimum of six months to approve the establishment of a new branch.

Additionally, UBS noted that obtaining a “change in control” approval in Russia might prove impossible, as it could be influenced by political factors. It’s important to note that UBS’s exposure to Russia contributed $98 million to its total emerging market exposure as of December 31, 2022. Recently, a Moscow court prohibited UBS and Credit Suisse from disposing of shares in their Russian subsidiaries due to changes in Russian law that require presidential approval for banks to sever ties with local businesses.

The majority of markets where UBS and Credit Suisse operate typically allow for an automatic transfer of all assets and liabilities during mergers, referred to as universal succession. However, the document highlighted that seven out of 51 jurisdictions do not recognise this practice, including Bahrain, Dubai, Abu Dhabi, Japan, Saudi Arabia, Thailand, and Turkey. In these markets, individual transfers are deemed cumbersome, time-intensive, and pose the risk of missing consents.