Swiss Prosecutors Launch Investigation into UBS-CS Merger...Rumors of 30% Workforce Reduction

The Swiss prosecution has launched an investigation to determine whether there were any legal violations during UBS's rushed acquisition and merger of Credit Suisse (CS). UBS, Switzerland's largest investment bank, had earlier decided on a rapid merger with government support amid rising fears of a global banking crisis triggered by the potential collapse of CS.

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According to major foreign media, the Swiss Federal Department of Justice and Police stated on the 2nd (local time) that "the purpose of this investigation is to analyze and identify all criminal offenses." The statement confirmed, "Authorities aim to proactively exercise their powers and responsibilities to contribute to a clean Swiss financial center" and "are establishing a system to promptly address all issues within their jurisdiction."

The specific targets or duration of the investigation were not mentioned. However, the statement added, "There are numerous aspects related to the CS investigation that require analysis." Accordingly, major foreign media expect a broad review covering not only the financial deterioration process of CS during its liquidity crisis but also the supervisory activities of financial authorities and any procedural violations in the government's liquidity support decisions.

When the merger decision between UBS and CS was announced under Swiss government intervention on the 19th of last month, criticism arose even within Switzerland, revealing the true face of the Swiss financial market, which had been regarded as the safest financial center globally for decades. The disclosed acquisition price at that time was 3 billion Swiss francs. The Swiss government supported liquidity worth 109 billion Swiss francs to facilitate the CS acquisition and prevent the spread of the financial crisis, and also agreed to guarantee part of the potential losses arising from the assets acquired by UBS.

The combined UBS-CS bank has assets totaling 1.6 trillion dollars and employs 120,000 staff. Sergio Ermotti, UBS CEO who was reappointed as a savior after the CS decision, said in an interview with an Italian newspaper that day, "The increased scale will give us more advantages," adding, "Within the integrated bank, we will follow the UBS model. This includes focusing on asset management business and limiting the investment business sector and associated risks within a certain range."

Swiss local media SonntagsZeitung cited sources on the same day, reporting that UBS may cut 25,000 to 36,000 jobs, equivalent to 20-30% of the total workforce after acquiring CS. Accordingly, it is estimated that up to 11,000 jobs will be reduced within Switzerland alone. The media stated, "The number of layoffs will be much higher than planned."

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