Swiss Probes Investigate Credit Suisse Takeover By UBS: A Step To Undo The Damage to Switzerland- The World’s Financial Centre

Swiss prosecutors have initiated a probe into the largest takeover of the country’s second-largest bank, Credit Suisse, by its nemesis UBS.

The agreement was signed in March when there were constant fears about Credit Suisse’s increasing financial risk. Switzerland’s Federal Prosecutor has stated that they would look into the matter thoroughly to check if a possible criminal offense has been conducted. Both Credit Suisse and UBS have refused to reply to the query.
The agreement for the acquisition of Credit Suisse by UBS was backed by the Swiss Government. The decision was initiated after they conducted emergency talks between the respective banks and the financial regulators.

During that time, the Swiss Government reinstated that the acquisition was the best way to bring back the confidence of the financial market and to manage risks overlapping the economy.
The takeover was announced because the markets were being shaken by the fears over the health of the global financial system, which was followed by the collapse of the two US banks.

The agreement announced the value of Credit Suisse at 3.15 billion USD. In addition, recently, the settlement has been valued at 8 billion USD.
The acquisition has angered the taxpayers and shareholders of both banks because they were deprived of the vote to take over.

Many have stated that the takeover of Credit Suisse has tampered with Switzerland’s image as the financial center of the world.

In response to the questions related to the probing, Switzerland’s Federal Prosecutor has stated that there were many events surrounding Credit Suisse necessary to identify a possible criminal offense.

The Office of the Attorney General has stated that they want to complete the mandatory steps and the responsibility to contribute to a clean Swiss financial center. It would be necessary to take a decision that comes within their area of responsibility.

They have even contacted the national and cantonal authorities and mentioned that the investigative orders were issued.

UBS-Credit Suisse Merger to undergo job cuts:

Credit Suisse has even stated recently that the bank merger would undergo a reduction in their total headcount by 20 to 30 percent.

The Swiss Bank Employees Association has spoken out about the situation, claiming that there is a lot at stake for the company’s employees and the economy. They have stated that the collapse would increase the risk of the loss of tens of thousands of jobs.

Integration of two of Switzerland’s leading banks, UBS and Credit Suisse, could result in up to 36,000 job losses around the world.

Sergio Ermotti, UBS’s former CEO, has announced that he will return to manage the merger’s risks. According to anonymous sources, management has decided a cut between 20% and 30% of the workforce, resulting in a loss of between 25,000 and 36,000 jobs. According to the report, up to 11,000 of these massive layoffs could occur in Switzerland alone.

Before the merger, UBS and Credit Suisse employed slightly more than 122,000 people. As a result, both banks would face staff reductions as a result of the proposed job cuts. UBS chairman Colm Kelleher has acknowledged that integrating these two businesses entails significant risks.

Credit Suisse has been engaged in scandals that have damaged investor confidence in recent years. The bank’s involvement in going bankrupt of British financial firm Greensill and the decline of US hedge fund Archegos are two of the most high-profile of these controversies. The bank was also involved in a bribery scandal in Mozambique and was penalized $2 million in a money laundering investigation comprising a Bulgarian cocaine network.

Credit Suisse was titled a Global Systematically Important Bank after being named one of the world’s 30 most prominent banks. They have been regarded as an integral international banking system too big to fail. However, market trends revealed that the bank was viewed as a weak link in the chain.

Credit Suisse’s stock dropped by 30% after the collapse of the two US banks. Furthermore, the bank suffered a massive loss of 7.9 billion USD in 2022 and expects a pre-loss every year.

Edited by Prakriti Arora