Swiss federal prosecutors are probing Credit Suisse/UBS merger for criminal breaches

UBS recently decided to make a sudden and rather rushed acquisition of one of its largest rivals, Credit Suisse. However, the executives seem to have underestimated the potential backlash that would come from the move. Not only did they anger the shareholders of both banks for not taking their consent, but they also triggered alarms in Switzerland’s government. Now, the Swiss federal prosecutors started priming the merger for any signs of violations of local criminal laws.

This Sunday, the office of Switzerland’s attorney general confirmed that it had launched an investigation into the merger. The authorities are looking for any potential breaches by regulators, government officials, or executives at the two banks. Essentially, everyone who has been involved in the merging process will have their actions investigated.

The merger was performed rapidly, and there is no doubt that it was a rushed job. However, it was also necessary to act quickly in order to avoid any financial meltdown. Even so, the prosecutors said that there were numerous aspects surrounding the event that warranted a probe.

The attorney general office stated that it wishes to fulfill its mandate proactively and that it has the responsibility to ensure that the Swiss financial center remains clean. For that purpose, it has created a monitoring system, which would allow it to immediately notice any issues that fall within its area of responsibility and take appropriate action.

The banks reacted after getting the regulator’s permission

So far, the two banks did not release any official comments on the investigation. The merger itself ended up costing 3 billion CHF, or $3.25 billion. UBS decided to acquire Credit Suisse in mid-March, and the move was actually backed by the Swiss government. The bank swooped in after Credit Suisse started seeing its share prices crash, which also concerned the local regulators, who feared that a banking crisis might follow.

The collapse of three major US banks is still fresh, and Switzerland feared that something similar might happen to its own financial companies. But, as mentioned, the banks reacted quickly, making the deal without bothering to ask for consent from the shareholders. The country’s regulator had given the green light for the deal, treating it as an emergency measure, and that was all that the banks needed.

Credit Suisse, as the name suggests, is a major lender that operates around the world. In fact, it was considered one of the banking institutions that are “too big to fall.” Switzerland’s central bank even opened a CHF 50 billion ($54 billion) credit facility to help the bank with its liquidity and to maintain investor confidence. Unfortunately, this did not help, but UBS’ acquisition will result in a mammoth banking institution that holds over $5 trillion in total invested assets.

At the same time, UBS is also allegedly going to lay off 20-30% of its staff, which is currently a rumor that was not officially confirmed at the time of writing.