UBS Group has agreed to purchase Credit Suisse for $3.2 billion, a deal that was made just a week after the Swiss government bailed out Credit Suisse with $54 billion. However, Swiss prosecutors have opened an investigation into the merger and potential crimes by executives at both banks, although they have not specified what parts of the agreement they will look into. The prosecutor's office has stated that it wants to contribute to a clean Swiss financial centre and has set up a monitoring system to take action immediately on any issues that fall within its area of responsibility.
UBS will take on Credit Suisse's first $5.4 billion in losses from unwinding derivatives and other risky assets, while also accepting its healthier and failing parts. The combined balance sheet is twice the size of Switzerland's economy, so UBS will need to slim down in size by selling off big chunks of operations. Credit Suisse is facing lawsuits from US shareholders for allegedly concealing financial woes.
According to Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, "Credit Suisse was on life support and Swiss authorities believed only a full transplant of the banks divisions into UBS would restore stability to the banking system." However, the prosecutor's office's investigation into the merger deal may cause delays or complications for the acquisition. The prosecutor's office has not indicated how long it expects its investigation to last.