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GENEVA: Swiss federal prosecutors said Sunday that they had opened an inquiry into the UBS takeover of its embattled banking rival Credit Suisse, following pressure from federal authorities and media leaks.

In an email to AFP, prosecutors said they issued orders to investigate after "taking stock of the situation with all the relevant internal services" and contacting national and local authorities.

The probe will aim to ensure Switzerland's financial centre remains "clean" and identify any criminal offences within their remit, they said.

UBS takeover of Credit Suisse: the main points

A "surveillance system" has also been put in place that will allow prosecutors to intervene if necessary.

The prosecutors added that they wanted to "have an overall view of the many aspects" of the events relating to the near-collapse of Credit Suisse, including those reported in the media, and to "secure and assess the available information".

"Different internal and external bodies have been mandated or contacted with the aim of clarifying and gathering information," they added.

Switzerland's GDP relies heavily on the financial sector that employes tens of thousands of people in the alpine country.

On the weekend of March 18-19, the marriage of Switzerland's two biggest banks was hastily arranged by the government to prevent a global financial meltdown, following fears of contagion from the collapse of three US regional banks.

Credit Suisse shares had tumbled and the second largest bank in the country was in danger of failing, sparking fears of turmoil on markets and the financial sector worldwide.

UBS rehires Ermotti as CEO to steer Credit Suisse takeover

Verbal assurances and a loan of 50 billion Swiss francs ($54.6 million) by the central bank days before the takeover were not enough to calm investor concerns.

Credit Suisse had been embroiled in a series of scandals before its share price collapsed, getting caught up in the bankruptcy of the British financial company Greensill and the implosion of the US hedge fund Archegos.

It was also embroiled in a bribery scandal in Mozambique involving loans to state-owned companies, and was fined $2 million in a money laundering case linked to a Bulgarian cocaine network.

The scandals, a major restructuring plan that failed to convince all observers and a heavy loss in 2022 risked a bankruptcy -- and with it the reputation of Switzerland's banking sector.

UBS, the country's largest bank, agreed to absorb its troubled rival for $3.25 billion in an emergency deal supervised by the government, the Swiss central bank and the financial regulator.

Both UBS and Credit Suisse are among a select group of lenders deemed "too big to fail" due to their importance to the global banking system.

The federal state and the central bank also provided substantial financial guarantees in the event of the discovery of unpleasant surprises in the books of accounts, which UBS did not have time to examine in detail.

For UBS, which has just reappointed its former CEO Sergio Ermotti to lead this merger, the "number one priority is to stabilise the situation".

The rescue merger is not only "the biggest transaction" since the 2008 financial crisis, it is also "the first time" that two systemically important banks in global level will merge, said Colm Kelleher, chairman of the board of directors of UBS.

These risks and the extraordinary size of the new megabank are worrying political and economic circles in Switzerland, beyond the likelihood of thousands of job losses.

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