ZURICH, SWITZERLAND – 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 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 on Wednesday in favor 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 over 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 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 finalized on June 12, raises serious concerns in Switzerland around jobs, competition and the size of the resulting bank relative to the Swiss economy.