The Swiss federal prosecutor’s office is investigating the circumstances that led to the emergency takeover of the bank Credit Suisse (CS) by its rival and compatriot UBS, under pressure from the Swiss authorities, and in particular leaks in the press.
The public prosecutor stressed that he wanted to ensure that the Swiss financial center remained “clean”, in an email sent to AFP where he indicated that he wanted to focus in particular on the very precise information that appeared in the international press during the negotiations, supposed to be secret.
He says he “issued investigation orders” following having carried out “an inventory of the situation with all the internal services concerned” and having “made contact with the national and cantonal authorities”.
“The Swiss Federal Prosecutor’s Office wants to proactively fulfill its mandate and responsibility to contribute to a clean Swiss financial center,” the email further states.
The banking sector and finance in general weigh heavily in the country’s GDP and employ tens of thousands of people.
The adventures of Credit Suisse, the national number two in the sector, which for several years has been lining up scandals and has been unable to recover and put its affairs in order, risked weighing on the reputation of the financial centre.
” Overview “
The prosecution explains that it wants “to have an overview of the many aspects of the events relating to CS – in particular those reported in the media – and to secure and evaluate the information available”.
“It is a question of analyzing and identifying any criminal offense that may fall within the jurisdiction” of the prosecution, according to the email.
“In this context, various internal and external bodies have been mandated or contacted with the aim of clarifying and gathering information”, further specifies the services of the Attorney General, Stefan Blättler.
Redemption or collapse
During the weekend of March 18 and 19, UBS, the number one bank in Switzerland, was pressured by the Swiss regulatory authorities and the federal government to take over Credit Suisse, its lifelong rival, at all costs.
The second largest bank in the country was simply in danger of collapsing.
The verbal support of the Swiss Central Bank and its massive loan of 50 billion Swiss francs (CHF), allocated the previous Wednesday, had done nothing to reassure investors, made extremely nervous by the upheavals which shook the banking sector in the States United for several weeks.
Considered the weak link in the banking sector in Europe, weakened by scandals, cluttered with a restructuring plan that had not convinced and weighed down by more than 7 billion Swiss francs in losses in 2022, Credit Suisse risked bankruptcy following having seen its share price drop for several days in a row and having difficulty accessing the market liquidity essential to continue to conduct its business.
After intense secret negotiations, but specific elements of which leaked to the international press, UBS agreed to buy Credit Suisse for 3 billion: a pittance. And with solid financial guarantees from the Federal State and the Central Bank in the event of the discovery of unpleasant surprises in the books of accounts, which UBS had not had the time to examine in detail.
It was not until the evening of Sunday March 19 that the Swiss government finally broke its silence, announcing the takeover that gave birth to a banking juggernaut like Switzerland has never known.
Considerable risks
UBS has just reappointed its former CEO Sergio Ermotti to lead this merger, which presents massive risks. The “number one priority is to stabilize the situation”, according to the group.
This merger is not only “the biggest transaction” since the 2008 financial crisis, it is also “the first time” that two systemically important banks (which, if they collapsed, would have a domino effect) globally will merge, said Colm Kelleher, Chairman of the Board of UBS.
These risks and the extraordinary dimensions of the new megabank are worrying political and economic circles in Switzerland. They fear, in addition to thousands of layoffs due to duplication in the activities of the two banks, that it is too powerful.
