Swiss parliament to investigate government-orchestrated takeover of Credit Suisse by UBS

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8th June 2023 – (Zurich) Switzerland’s parliament will launch an inquiry into the government-led takeover of Credit Suisse by larger rival UBS, in an unprecedented move following a vote on Thursday. The parliamentary commission of inquiry will investigate how the Swiss authorities quickly orchestrated the merger of the country’s two largest banks over a weekend in March. The commission will examine the legality, opportunity, and effectiveness of the Swiss authorities’ activities in the takeover and report on gaps observed at the institutional level.

After the lower house of parliament voted unanimously on Wednesday in favour of creating the rare commission of inquiry, the upper chamber, or Council of States, voted 37-5 for it on Thursday. The commission will be composed of 14 lawmakers, seven from each house of parliament, with all major parties represented. They will be nominated next week, and the commission will have a budget of five million Swiss francs.

The inquiry will have a broad remit and will be able to decide the extent of its investigations and could trawl back over several years. There is no time limit, but the commission will probably last more than a year. The government said on Friday it would give its “full support” to the commission, deeming it “useful and necessary to examine in detail” the events behind the emergency rescue.

The takeover of Credit Suisse into UBS, which should be finalised on 12th June, raises serious concerns in Switzerland around jobs, competition, and the size of the resulting bank relative to the Swiss economy. Like UBS, Credit Suisse was among 30 international banks deemed “too big to fail” due to their importance in the global banking architecture. However, the collapse of three U.S. regional lenders in March left Credit Suisse looking like the weakest link in the chain, and its share price plunged more than 30% on 15th March.

The Swiss government, the central bank, and the financial regulators then stepped in and forced UBS into a $3.25 billion takeover, announced on 19th March before the markets reopened the following day. The government feared Credit Suisse would have quickly defaulted and triggered a global banking crisis that would have also shredded Switzerland’s valuable reputation for sound banking.

The parliamentary commission of inquiry will be the fifth ever held in Switzerland and the most powerful tool at parliament’s disposal. It has the authority to consult the government’s confidential minutes and question senior officials. The last inquiry was in 1995 and investigated failures surrounding the Federal Pension Fund.