The Competition Commission of India (CCI) has approved the proposed merger of Credit Suisse Group AG with UBS Group AG.
The UBS Group AG (UBS) is a multinational investment bank and financial services company founded and based in Switzerland, and active globally. UBS’ businesses comprise wealth management, asset management, investment banking services, and retail and corporate banking. In India, UBS’ business is primarily focused on brokerage services.
Credit Suisse Group AG (Credit Suisse) is a multinational investment bank and financial services company founded and based in Switzerland. Credit Suisse is active globally and its businesses comprise wealth management, asset management, investment banking services, and retail and corporate banking. In India, Credit Suisse’s businesses comprise wealth management and investment banking services.
The proposed combination entails UBS’s proposed acquisition of Credit Suisse by way of an absorption merger with UBS being the surviving legal entity.
The approval of CCI follows the global takeover of the financially stressed Credit Suisse by UBS in March this year, following the collapse of the Swiss-based global wealth manager. However, it has now come to light that UBS is grappling with several bad investments and other liabilities, originating from drug money laundering and bribery allegations.
When the government-backed merger was announced, UBS said that it would result in business creation worth $35 trillion. As part of the all-share transaction, Credit Suisse shared holders would receive 1 UBS share for a block of 22.48 shares of Credit Suisse, translating to CHF.76 per share.
However, according to Bloomberg, UBS is expected to take a hit of $17 billion, arising from a negative impact of $13 billion after fair value adjustments and another $4 billion in legal costs. Even as the lawyers work out the finer details of the takeover, UBS has barred Credit Suisse from extending any credit facility over CHF100 million.
The Swiss government financially backed the merger by committing CHF250 billion from public funds to save more than a century old investment back from going bankrupt.