Citing people familiar with the matter, the Financial Times said on Sunday that UBS AG is set to implement serious restrictions on Credit Suisse bankers, which includes a ban on new complex financial products.
On Saturday, Bloomberg news reported that the emergency acquisition of credit Suisse by UBS will close on Monday. The emergency takeover was initially indicated by credit Suisse group AG Chief Executive Ulrich Koerner in an internal memo.
In an internal memo to employees, Koerner said, “While Monday brings to an end this chapter in our history, it is also the beginning of a new and exciting future. Monday is legal close is the next important step as we work to get you the answers you need as quickly as possible.”
UBS chief executive Sergio Ermotti also hinted the takeover of credit Suisse to be closing on Monday. Although UBS declined to comment further on the matter.
Coming up with a list of nearly two dozen of what UBS has described as “red lines” that prohibit credit so employees from a range of activities, that comprise taking on clients from countries like Libya, Russia, Venezuela and Sudan as well as it bars them from Introducing new products without permission from UBS managers, the Financial Times report added.
Politicians from Ukraine as well as the State owned enterprises will also be barred to prevent potential money laundering, according to the report.
On Friday, the government of Switzerland agreed to guarantee up to 9 billion Swiss francs ($9.96 billion) worth losses that UBS might incur from the sale of its competitor’s assets beyond 5 billion Swiss francs the lender is due to cover itself.
Last Friday, The Swiss government agreed on how they will deal with losses linked to the bank’s emergency acquisition of Credit Suisse, Paving a path for the agreement to close within days, and giving rise to a giant Swiss bank I am cementing its position as a global wealth manager.
The deal, which was negotiated since Credit Suisse’s rescue in March making the Swiss government to guarantee up to Fr.9 billion of losses UBS might face from the former sale of assets. However, the deal comes with various terms and conditions including it to be mandatory for the bank to keep its headquarters in Switzerland, the government said in a statement.
Agreement of loss protection is likely to become effective with the completion of Credit Suisse’s acquisition, expected as early as June 12 – this was said by UBS in a separate statement.
The CEO Sergio Ermotti directed that the bank was on track to complete the transaction deal on Monday. “From Monday we will be new colleagues,“ he said to the Swiss economic forum in Interlaken.
The state money won’t come for free, and UBS will have to pay various set up and maintain in fees, along with premiums on money drawer. The government made the cash available to facilitate the emergency acquisition of Credit Suisse and prevent a wider banking crisis that a collapse of the lender could cause.
In a statement, the government said that the guarantee covered assets with a cost of around Fr.44 billion, which is equivalent to about 3% of the combined assets of the amalgamated group and comprises majorly of derivatives, loans, legacy assets and structured products.
According to the government, the valuation of the losses are expected to be made available in the third quarter of this year whereas, this scale was “highly dependent on the actual wind down of the assets concerned and market developments.”
The government further added, “Consequently, it is not yet possible to estimate the probability of the guarantee being drawn and amount involved.“