FirstFT: UBS sets tight rules for Credit Suisse bankers to ease takeover risks

Our top story today is on UBS, which has drawn up a list of nearly two dozen “red lines” that prohibit Credit Suisse bankers from a range of activities in an effort to lower risk as it prepares to take over its ailing rival as early as today.

Banned activities include taking on clients from high-risk countries such as Libya, Russia, Sudan and Venezuela and launching new products without approval from UBS managers, according to people with knowledge of the measures. Ukrainian politicians and state-owned enterprises will also be blocked to prevent potential money laundering.

“We are worried about ‘cultural contamination’,” UBS chair Colm Kelleher said last month about taking on Credit Suisse staff. “We are going to have an incredibly high bar for who we bring into UBS.”

The prohibitions, written by UBS’s compliance department, are designed to reduce the risk of the transaction, which was orchestrated by Swiss authorities three months ago to save Credit Suisse from collapse.

Here’s what else I’m keeping tabs on today:

• Nato: Secretary-general Jens Stoltenberg visits US president Joe Biden at the White House to discuss the military alliance’s summit in Vilnius, Lithuania, next month, where the war in Ukraine will top the agenda.

• Economic data: The US publishes its federal budget balance.

• Results: US software company Oracle reports.

• Russia Day: Financial markets are closed in the country.

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Five more top stories

1. Exclusive: EU funds managed by Odey Asset Management are discussing restrictions on investors’ withdrawals as part of emergency measures to contain the fallout of sexual misconduct allegations against the hedge fund manager’s founder. Read the full story.

2. Andreessen Horowitz has chosen London for its first office outside the US, betting that the UK government will create a more hospitable climate for blockchain start-ups amid a crypto crackdown by American financial regulators. Read more on the Silicon Valley venture capital firm’s move.

• Related: US business confidence in the UK has fallen for the third year in a row due to Brexit, rising corporate taxes and political turmoil in Westminster, according to new research.

3. The Dutch government plans to vet international students after universities barred some Chinese postgraduates from top technology degrees over fears they could be a risk to national security, the latest sign of a stricter stance from EU countries on perceived threats from Beijing after decades of openness. Here are more details on what sparked the concerns.

4. Exclusive: Lex Greensill and four former Credit Suisse bankers have been named as suspects in a Swiss criminal case due to be formally opened this month. The case is related to the collapse of a $10bn group of funds the bank offered clients that were linked to the Australian banker’s specialist finance group, Greensill Capital. Read the full story.

5. Ukraine claimed to have breached Russia’s defences and freed at least three villages yesterday in the south of the Donetsk region. The day before, President Volodymyr Zelenskyy had confirmed Kyiv’s long-awaited counter-offensive was finally under way, with the aim to liberate some 18 per cent of occupied territory in south-eastern regions.

The Big Read

With the collective weight of the US Federal Reserve’s forceful monetary tightening efforts to date and the retreat by regional lenders across the country in the wake of a string of bank failures, there is growing apprehension that the American economy’s resilience is finally beginning to crack.

We’re also reading . . . 

Chart of the day

A majority of economists polled by the Financial Times forecast the US Federal Reserve will lift its benchmark rate to at least 5.5 per cent this year. Fed funds futures markets suggest traders favour just one more quarter-point rate rise in July.

Take a break from the news

Former French president François Hollande sits down with editor Roula Khalaf for Lunch with the FT to discuss French politics, the war in Ukraine and dealing with the Kremlin. “Putin cannot be seduced,” Hollande said. “He respects force.”

Additional contributions by Benjamin Wilhelm and Gordon Smith