The FCA issued a statement last night saying it was “minded” to approve the deal in the UK.

Both UBS and Credit Suisse have significant investment and wealth management operations in the UK.

UBS said the deal would create a “global wealth manager" with approximately £3.8bn of invested assets.

Credit Suisse has faced questions about its future in recent months after a series of problems caused a crisis of confidence in the bank’s future.

UBS said its strategy would be unchanged and included a focus on growth in the Americas and the Asian Pacific region.

UBS said the merged bank will be a leading asset manager in Europe, with invested assets of more than £1.2bn.

UBS Chairman Colm Kelleher said: “This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue.

“We have structured a transaction which will preserve the value left in the business while limiting our downside exposure. Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses. The transaction will bring benefits to clients and create long-term sustainable value for our investors.”

UBS chief executive Ralph Hamers said: “Bringing UBS and Credit Suisse together will build on UBS’s strengths and further enhance our ability to serve our clients globally and deepen our best-in-class capabilities. The combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks.”

Under the terms of the all-share transaction, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held, equivalent to Swiss CHF 0.76/share for a total consideration of CHF 3 billion (£2.5bn).

It is unclear what the merger will mean for staffing at the two banks but cost reductions are expected. UBS said that the combination of the two businesses is expected to generate annual run-rate cost reductions of more than £6.6bn by 2027.

UBS says the deal will help its investment bank to reinforce its global position with institutional, corporate and wealth management clients through the “acceleration of strategic goals in global banking” while “managing down” the rest of Credit Suisse’s Investment Bank.

Colm Kelleher will remain chairman and Ralph Hamers will be group CEO of the combined group.

The transaction is not subject to shareholder approval. UBS has obtained pre-agreement from FINMA, Swiss National Bank, Swiss Federal Department of Finance and other core regulators on the approval of the deal.

In a statement yesterday the FCA said: “Earlier today, the Swiss authorities announced a wide range of actions to support financial stability. The FCA has been in contact with its Swiss counterparts and other UK regulatory authorities in advance of today’s announcements. The FCA has indicated that it is minded to approve the actions announced today in relation to the entities which fall under its regulatory and supervisory remit. 

"The FCA continues to engage closely with UK and international regulatory partners to monitor market developments."