Swiss parliament to investigate Credit Suisse collapse
Credit Suisse's collapse and its takeover by UBS will be investigated by a parliamentary commission (PUK), the office of Switzerland's upper house of parliament said on Wednesday. The move comes after two sub-committees supported a deeper investigation into how the government, Swiss central bank and financial market regulator acted in the run up to the emergency rescue of Credit Suisse.
Credit Suisse's collapse and its takeover by UBS will be investigated by a parliamentary commission (PUK), the office of Switzerland's upper house of parliament said on Wednesday.
The move comes after two sub-committees supported a deeper investigation into how the government, Swiss central bank and financial market regulator acted in the run up to the emergency rescue of Credit Suisse. The investigation's exact mandate as well as the membership of the commission have not yet been determined, and will be decided by both legislatures during their next sessions, which begin on May 30, it said.
"Given the magnitude of the events and the financial impact, the office concludes that the establishment of a PUK is warranted," the office of the upper house said in a statement. "The office advocates a broad formulation of the investigative mandate, ...and the clarification of the events of recent years that led to the emergency merger," it added.
Under the rescue deal engineered by Swiss authorities over one March weekend, UBS agreed to buy Credit Suisse for 3 billion Swiss francs in stock and to assume up to 5 billion francs in losses that would stem from winding down part of the business, marking the first rescue of a global bank since the 2008 financial crisis. A regulatory filing on Tuesday in the United States showed how UBS was rushed into buying Credit Suisse in a deal it did not want, while UBS also flagged tens of billions of dollars in potential losses from the takeover.
The use of emergency laws to ease the state-engineered takeover could be among the topics up for discussion by the commission. The bank's takeover by UBS has been backed by 200 billion Swiss francs ($225.00 billion) in support from the government, which was determined to prevent Credit Suisse's collapse triggering a broader crisis in the global financial system.
The Swiss government has also agreed to absorb up to 9 billion francs in potential losses incurred by UBS as a result of the takeover. The investigative commission will not be able to stop the deal, it will have subpoena powers and would be expected to question managers of both banks as well government officials and have access to government meeting minutes.
The takeover, signed off by a small group of lawmakers, drew widespread public criticism, particularly for bypassing the parliament, which last month denied the deal its stamp of approval. The action was largely symbolic and the takeover is due to go ahead, with UBS expecting to close it in coming weeks.
The commission's hearings could, however, yield new insights into how the biggest banking rescue since the global financial crisis came about. It would be only the fifth time such a commission has been established in Switzerland's modern history, with the first one set up in 1961 to examine the commissioning process for Mirage fighter jets.
($1 = 0.8889 Swiss francs)
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