UBS, a Swiss bank, has faced delays in getting regulatory approvals for its takeover of Credit Suisse in four countries: South Korea, India, Ireland, and Saudi Arabia. UBS has expressed concerns that slow regulatory processes in these countries could affect the completion of the merger and other related deals.
UBS prepared a document on September 6 to assess the timeline for obtaining necessary regulatory approvals for integrating Credit Suisse. They warned that uncooperative regulators could pose a risk to the merger and lead to complications, potentially resulting in UBS having to sell assets or wind down certain businesses.
Credit Suisse, Switzerland’s second-largest bank, experienced financial difficulties and had to be rescued by UBS in March. Although UBS completed the takeover in June, they still need approvals from regulators in the countries where both banks operate.
UBS mentioned that a single regulator’s delay can impact the timeline for completing the merger and other related transactions. They hope to complete the integration by 2024, but the document suggests it could be as early as May next year.
In South Korea, obtaining new licenses may take 18 to 22 months, while in Ireland, it could take up to two years, and in Saudi Arabia, up to 12 months. India’s regulator may take at least six months to approve the opening of a new branch.
UBS also expressed concerns about Russia, where obtaining “change in control” approval may be politically influenced. UBS has a substantial exposure to Russia, contributing $98 million to its emerging market exposure as of December 31, 2022.
In some cases, courts have prevented UBS and Credit Suisse from disposing of shares in their Russian subsidiaries, and new laws require presidential approval for banks to cut ties with their local businesses.
Most of the markets where UBS and Credit Suisse operate allow for an automatic transfer of assets and liabilities during mergers. However, seven jurisdictions, including Bahrain, Dubai, Abu Dhabi, Japan, Saudi Arabia, Thailand, and Turkey, do not recognize this practice. Individual transfers in these markets can be complex, time-consuming, and risky due to potential consent issues.
