UBS will impose strict restrictions on Credit score Suisse bankers, together with a ban on new purchasers from high-risk nations and sophisticated monetary merchandise, because it prepares to take over its ailing rival on Monday.
UBS Executives have compiled a listing of practically two dozen “purple traces” that prohibit swiss credit score personnel from a variety of actions from the primary day the 2 banks are mixed, in keeping with individuals with data of the measures.
Prohibited actions embrace accepting purchasers from nations resembling Libya, Russia, Sudan and Venezuela and launching new merchandise with out the approval of UBS managers.
Ukrainian politicians and state-owned corporations may also be blocked to stop doable cash laundering.
“We’re involved about ‘cultural contamination,’” UBS Chairman Colm Kelleher mentioned final month about Credit score Suisse’s staffing. “We’re going to have an extremely excessive bar for who we convey to UBS.”
The bans, written by UBS’s compliance division, are designed to scale back the chance of the transaction, which was orchestrated by Swiss authorities three months in the past to save lots of Credit score Suisse from collapse.
UBS executives worry taking over a financial institution that has historically been way more prepared to tackle dangerous purchasers and supply them high-risk merchandise. The final years of Credit score Suisse as an unbiased firm have been marked by a sequence of scandals and crises, which an inside report he mentioned they have been the results of his “blasé angle in direction of danger”.
UBS finalized an settlement with the Swiss authorities on Wednesday that it’ll present the financial institution with as much as 9 billion Swiss francs ($10 billion) to guard it from losses within the bailout. The federal government help would take impact after UBS coated the primary 5 billion Swiss francs of losses.
The loss safety settlement was the final hurdle UBS needed to cross earlier than finishing the acquisition.
The record of restrictions, which UBS executives have dubbed “purple traces”, covers 11 monetary dangers and 12 non-financial dangers.
Whereas lots of the dangers are operational, associated to points resembling analysis format and workplace utilization, different decrees have an effect on Credit score Suisse’s enterprise areas extra immediately.
Beneath the principles, Credit score Suisse bankers are barred from buying and selling quite a lot of arcane monetary merchandise, together with Korean derivatives and choices on sure quantitative indices.
In 2006, Credit score Suisse misplaced $120 million in Korean derivatives, prompting a shakeup of the unit’s administration crew. However the financial institution has continued to function out there.
Credit score Suisse workers should additionally ask UBS executives for permission to make loans backed by belongings resembling yachts, boats and actual property in extra of $60 million.
As banker to a few of the world’s richest individuals, Credit score Suisse has lengthy supplied loans to finance billionaires’ non-public jet purchases, whereas additionally getting concerned in yacht financing.
Final yr, Credit score Suisse requested hedge funds and different buyers destroy paperwork linked to the yachts and personal jets of his wealthiest purchasers following revelations within the Monetary Instances of a securitization deal involving loans he made to oligarchs that have been later sanctioned.
Credit score Suisse’s Swiss financial institution employees should ask UBS for permission to make loans to debtors outdoors the nation and for overseas properties.
To restrict the chance of cash laundering, bribery and corruption, Credit score Suisse bankers are additionally prohibited from bringing in new purchasers from quite a lot of high-risk nations. These embrace Afghanistan, Albania, Belarus, Burkina Faso, Democratic Republic of the Congo, El Salvador, Eritrea, Ethiopia, Guinea, Haiti, Iraq, Kosovo, Kyrgyzstan, Libya, Moldova, Myanmar, Nicaragua, Palestine, Russia, South Sudan, Sri Lanka, Sudan, Tajikistan, Turkmenistan, Uzbekistan, Venezuela, Yemen and Zimbabwe.
Credit score Suisse employees obtained a company-wide memo on Thursday telling them to count on new “purple traces” on the day the deal closed, although particulars of the principles weren’t included.
UBS and Credit score Suisse declined to touch upon the principles.
Individually, Swiss lawmakers voted Thursday to authorize a particular parliamentary fee of inquiry into Credit score Suisse’s downfall.