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ECONOMY

Swiss parliament to probe Credit Suisse takeover

Switzerland's parliament will probe the government-orchestrated takeover of the stricken Credit Suisse bank by larger rival UBS, in an extremely rare move, following a vote on Thursday.

A signs of Swiss bank Credit Suisse is seen in Basel.
A sign of Swiss bank Credit Suisse is seen in Basel. . Photo: Fabrice COFFRINI / AFP)

A parliamentary commission of inquiry will be established to shed light on how the Swiss authorities rapidly stitched together the merger of the wealthy Alpine country’s two biggest banks over a weekend in March.

After the lower house of parliament voted unanimously 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 examine “the legality, opportunity and effectiveness of the activities” of the Swiss authorities in the takeover. It will report on “gaps observed at the institutional level”.

Like UBS, Credit Suisse was among 30 international banks deemed too big to fail due to their importance in the global banking architecture.

But the collapse of three US regional lenders in March left Credit Suisse looking like the weakest link in the chain and its share price plunged more than 30 percent on March 15.

The Swiss government, the central bank and the financial regulators then stepped in and strongarmed UBS into a $3.25-billion takeover announced on March 19 before the markets reopened the following day.

The government feared Credit Suisse would have quickly defaulted and triggered a global banking crisis that would also have shredded Switzerland‘s valuable reputation for sound banking.

The commission will be composed of 14 lawmakers — seven from each house of parliament — with all the major parties represented. They will be nominated next week. It will have a budget of five million Swiss francs ($5.5 million).

With a broad remit, it 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 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.

It will be only the fifth parliamentary committee inquiry ever held in Switzerland.

The last was in 1995 and investigated failures surrounding the Federal Pension Fund.

It is the “most powerful” tool at parliament’s disposal, said Le Temps newspaper, with the authority to consult the government’s confidential minutes and question senior officials.

The merger of Credit Suisse into UBS, which should be finalised on June 12, raises serious concerns in Switzerland around jobs, competition and the size of the resulting bank relative to the Swiss economy.

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ECONOMY

UBS marks takeover milestone as Credit Suisse is no more

Swiss banking giant UBS on Friday completed the merger of its parent company with Credit Suisse AG as its fallen rival legally ceased to exist, more than a year after the emergency takeover.

UBS marks takeover milestone as Credit Suisse is no more

In March 2023, Switzerland’s biggest bank was strongarmed by the government into buying Credit Suisse over fears that the second largest lender in the country might go under and spark a global financial crisis.

In a statement, UBS said Credit Suisse AG — or limited company — had been deleted from the Canton of Zurich’s commercial register, and has thus ceased to exist as a separate entity.

The bank added that Credit Suisse AG’s clients are now considered to be clients of UBS AG.

READ ALSO: Is the UBS takeover of Credit Suisse good for the Swiss economy?

However, Credit Suisse customers may continue to use Credit Suisse tools and platforms for an interim period, except in certain cases.

“Today we have achieved a significant milestone in our integration journey,” said UBS chief executive Sergio Ermotti.

Under pressure from the Swiss government, UBS agreed to take over the troubled lender for $3.25 billion, a modest sum for an institution ranked among the 30 banks worldwide considered too big to fail.

However, the takeover opened up a new chapter for UBS, which found itself forced to clean up a bank rocked by repeated scandals.

After the takeover was completed in June 2023, the two banks had initially continued to operate separately.

But with Friday’s merger, UBS has taken over Credit Suisse’s rights and obligations.

“The merger of our parent banks is critical to facilitating the migration of clients onto UBS platforms,” Ermotti said.

“It will also unlock the next phase of cost, capital, funding and tax benefits from the second half of 2024,” he added.

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