EU clears UBS takeover of Credit Suisse

THE European Commission approved the takeover by UBS of its embattled banking rival Credit Suisse on Thursday (May 25), ruling that the merger does not harm competition in Europe.

The commission, which runs the EU’s powerful anti-trust regulator, said “the merger would not significantly reduce competition in the markets where their activities overlap” within the European Economic Area.

In March, UBS, Switzerland’s biggest bank, swooped in to buy out Credit Suisse, the country’s second largest, in a government-brokered deal worth 3 billion Swiss francs (S$4.46 billion), following fears of contagion from the collapse of three US regional banks.

Investors, rocked by the stateside turmoil, sold Credit Suisse shares, forcing the Swiss government to intervene alongside SNB central bank and the FINMA financial regulators.

There are concerns in some quarters about the risks from the megabank, and anger in Switzerland at Credit Suisse’s leadership for how it handled the beleaguered bank.

The commission said, however, that the combined bank will still face “significant competitive pressure from a wide range of competitors in all of those markets, including several major global banks as well as specialist providers and strong local players”.

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Investment banking represents 25.2 per cent of UBS’ turnover, compared to nearly 20.6 per cent at Credit Suisse, with the pair running many similar activities such as mergers and acquisitions advice.

UBS in April said it would likely complete the takeover before the end of June.

Prior to the merger, Credit Suisse had been shaken by a series of scandals in recent years, including the bankruptcy of British financial firm Greensill. AFP