Following pressure from federal authorities and media leaks, Swiss federal prosecutors announced on Sunday that they had started an investigation into UBS takeover of embattled banking competitor Credit Suisse.
The Federal Prosecutor’s Office in Switzerland has started an investigation into the state-backed takeover of Credit Suisse by UBS Group. The attorney general’s office announced on Sunday.
The prosecutor, based in the Swiss capital Bern, is investigating possible criminal violations by government officials In addition to regulators, and executives at the two banks. Which agreed on an emergency merger last month to prevent a financial meltdown in the country.
According to the statement, there were “numerous aspects of events surrounding Credit Suisse” that merited investigation. And needed to be analysed in order to “identify any criminal offences that could fall within the [prosecutor’s] competence.”
“The Attorney General’s Office wants to proactively fulfill its mandate and responsibility to contribute to a clean Swiss financial centre. And has set up a monitoring system so that it can take immediate action on any issues that fall within its area of responsibility.”
It made no mention of which aspects of the merger agreement it might investigate or how long the inquiry might last.
UBS and Credit Suisse both declined to respond.
A Marriage by Risk
The scandals, a significant restructuring plan that failed to persuade all observers. And a large loss in 2022 all posed a threat to the bank’s reputation in Switzerland.
In an emergency deal overseen by the government, the Swiss central bank, and the financial regulator. UBS, the country’s largest bank, decided to absorb its troubled rival for $3.25 billion.
Because of their importance to the global banking industry, UBS and Credit Suisse are both considered “too big to fail.”
The federal government and the central bank also offered substantial financial guarantees in the event. That unpleasant surprises in the books of accounts were discovered. Which UBS did not have time to thoroughly investigate.
The “number one priority” for UBS, which has just reappointed its former CEO Sergio Ermotti to head this merger. Which is to “stabilize the situation.”
The rescue merger is not only the “largest transaction” since the 2008 financial crisis, but it is also “the first time” that two critically important banks will combine on a global scale, according to UBS Chairman of the Board of Directors Colm Kelleher.
Beyond the possibility of thousands of job losses, these risks and the extraordinary scale of the new megabank are causing concern in Swiss political and economic circles.