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Swiss prosecutor investigates Credit Suisse takeover

Ermotti at a press conference
In the hot seat: New UBS CEO Sergio Ermotti takes his seat at a press conference in Zurich on Wednesday next to UBS Chairman Colm Kelleher (centre) and outgoing CEO Ralph Hamers © Keystone / Michael Buholzer

The Swiss Office of the Attorney General (OAG) has opened an investigation into the state-backed takeover of Credit Suisse by UBS, the Financial Times reported on Sunday.

The Bern-based prosecutor is looking into potential breaches of Swiss criminal law by government officials, regulators and executives at the two banks, which agreed on an emergency merger last month, the report saidExternal link citing the OAG.

+ How to fuse two Swiss banking giants

There were “numerous aspects of events around Credit Suisse” that warranted investigation and which needed to be analysed to “identify any crimes that could fall within the competence of the [prosecutor]”, the report added.

The FT said Attorney General Stefan Blättler had issued a number of “investigatory orders” to government bodies and his office had been in contact with the federal and cantonal governments and was likely to seek to interview key officials in relation to the takeover.

The OAG gave no indication of any specific aspects of the merger agreement it might look into or how long the investigation might last.

Both UBS and Credit Suisse declined to comment to Reuters.

‘Astonishing’

“It’s astonishing that the prosecutor would comment,” said Mark Pieth, professor emeritus at the University of Basel, where he has taught criminal law and criminology. But the rescue “is so out of the ordinary that they had to say something”.

Pieth said the prosecutor could be probing breaches of secrecy provisions by officials, or the trading on inside information, adding that the wiping out of some bondholders as planned under the deal is also problematic.

On March 19 UBS agreed to buy Zurich rival Credit Suisse for CHF3 billion ($3.3 billion) in a deal engineered by the Swiss government, the central bank and market regulator to avoid a meltdown in the country’s financial system.

A poll of Swiss economists found that nearly half think the takeover of Credit Suisse was not the best solution and warned that the situation had dented Switzerland’s reputation as a banking centre.

On Sunday the SonntagsZeitung reported that the new megabank created by the forced merger was set to reduce its global workforce by 20-30% – between around 25,000 and 36,000 positions. Up to 11,000 jobs would be affected in Switzerland alone.

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