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Swiss prosecutors probe Credit Suisse ahead of takeover; UBS to fire up to 30% staff

2 min read . Updated: 03 Apr 2023, 09:12 PM IST Edited By Anwesha Mitra
(FILES) In this file photo taken on March 24, 2023 shows a sign of Credit Suisse bank. - Embattled Swiss banking giant Credit Suisse has failed to disclose more than $700 million in previously undeclared accounts since 2014, in violation of a plea deal with the US Department of Justice, a Senate committee said on March 29, 2023. The findings of the two-year Senate Finance Committee probe add to the woes of the Swiss investment bank, which was pushed to merge with regional rival UBS earlier this month after suffering contagion from the collapse of Silicon Valley Bank. (Photo by Fabrice COFFRINI / AFP) (AFP)Premium
(FILES) In this file photo taken on March 24, 2023 shows a sign of Credit Suisse bank. - Embattled Swiss banking giant Credit Suisse has failed to disclose more than $700 million in previously undeclared accounts since 2014, in violation of a plea deal with the US Department of Justice, a Senate committee said on March 29, 2023. The findings of the two-year Senate Finance Committee probe add to the woes of the Swiss investment bank, which was pushed to merge with regional rival UBS earlier this month after suffering contagion from the collapse of Silicon Valley Bank. (Photo by Fabrice COFFRINI / AFP) (AFP)

The UBS takeover of rival Credit Suisse was engineered in a bid to rein in turmoil in global banking. But concerns have been voiced about the level of state support offered in the deal, with nearly 260 billion Swiss francs in liquidity and guarantees offered by the government and Swiss National Bank

Days after the Credit Suisse takeover was announced, Swiss authorities are now probing the events leading up to the massive deal. UBS Group AG had taken over its smaller rival in mid-March with the $3.3 billion deal being announced by the Swiss government. The deal may also reduce UBS' overall workforce by up to 30%. This will translate to as many as 11,000 cuts in Switzerland and another 25,000 worldwide.

While officials are working to gather information into potential crimes that may have taken place around the takeover, this is currently not a criminal inquiry. The probe also falls short of a formal investigation. Credit Suisse and UBS shares however fell after the announcement, with both companies set for their biggest daily decline in 10 days.

The attorney general's office said Monday that it wanted to “proactively fulfil its remit and its responsibility to contribute to a clean Swiss financial sector." An AP report also quoted authorities to add that the AG's office had set set up “monitoring" that would enable it to get involved immediately if any offences were committed that come under its auspices.

Switzerland's government and financial regulators had helped engineer massive deal last month, in part to calm worries about the global financial system. The bank had been hemorrhaging deposits, while shareholders dumped its stock and creditors rushed to seek repayment in the days preceeding the takeover. The $3.25 billion agreement will now leave the country with a single huge global bank.

The bank has faces years of troubles that predated financial turmoil spurred by the collapse of two US banks, ranging from losses on hedge fund bets to fines over failing to prevent money laundering by a Bulgarian drug ring and not reporting secret offshore accounts that wealthy Americans used to avoid paying taxes. 

(With inputs from agencies)

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