©Reuters. FILE PHOTO: Swiss bank UBS and Credit Suisse logos in Zurich, Switzerland March 20, 2023. REUTERS/Denis Balibouse/File Photo
By Gabrielle Tetrault Farber
GENEVA (Reuters) – Swiss prosecutors have opened an investigation into UBS Group’s state-backed takeover of Credit Suisse, prosecutors said on Sunday.
Prosecutors in the Swiss capital of Bern are investigating possible violations of the country’s criminal law by government officials, regulators and executives at the two banks, which last month agreed on an emergency merger to avoid a meltdown in the country’s financial system.
There are “numerous aspects of what is happening around Credit Suisse” that warrant an investigation and that need to be analyzed in order to “identify any criminal offenses that could fall within the jurisdiction of the Federal Constitutional Court.” [prosecutor]”, it said in a statement.
“The Attorney General wants to proactively fulfill their mandate and responsibility to contribute to a clean Swiss financial center and has set up a monitoring system to be able to take immediate action on all issues falling within their area of responsibility,” added the Attorney General.
There were no indications of specific aspects of the merger agreement it might examine or how long the investigation might take.
Both UBS and Credit Suisse declined to comment.
UNUSUAL
“It’s amazing that the public prosecutor’s office is commenting on this,” said Mark Pieth, professor emeritus at the University of Basel, where he taught criminal law and criminology. But the rescue “is so unusual that they had to say something.”
Pieth said the prosecutor could investigate non-disclosure violations by officials or inside information trading, adding that the wiping out of some bondholders as part of the deal is also problematic.
In the deal, announced March 19 and orchestrated by the Swiss government, central bank and market regulator, UBS would acquire rival Credit Suisse for 3 billion Swiss francs ($3.3 billion). The bank is trying to complete the deal by the end of April, sources have told Reuters.
The Swiss public and politicians have raised concerns about the level of government support, with almost 260 billion Swiss francs in liquidity and guarantees being offered by the government and the Swiss National Bank.
A survey of Swiss economists found that almost half did not think the takeover of Credit Suisse was the best solution and warned that the situation had damaged Switzerland’s reputation as a banking centre.
The acquisition, which should also help ensure financial stability at a time of turbulence worldwide, has raised concerns among critics about the size of the merged bank, with assets of $1.6 trillion and more than 120,000 employees worldwide.
Up to 30% of the workforce could lose their jobs as a result of the takeover, according to an unnamed senior UBS executive quoted in Swiss media.
($1 = 0.9148 Swiss Francs)
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