The no of the funds and the class action. Thud on the stock exchange for Ubs and Credit Suisse- Corriere.it

That the forced marriage with Credit Suisse involves an enormous amount of risk, the president of UBS, Colm Kelleher, recognized it immediately, recalling the former CEO Sergio Ermotti to lead the integration between the rival banks, the first of two systemically important credit institutions. The first dangers are already appearing.

After the opening of an investigation by the Swiss federal prosecutor’s officedisclosed on Sunday, UBS stock lost 3.8% yesterday, before closing down 2.88% at 18.74 francs on the Zurich Stock Exchange, while Credit Suisse shares dropped on 2, 36% at 0.80 francs.

The federal prosecutor is working to gather information on many aspects of the 3 billion franc takeover, orchestrated by the state, which will lead to painful personnel cuts. According to the Swiss newspaper SonntagsZeitung, the combination of the two banks could lead to a reduction in the total workforce of 30%, with the elimination of 11,000 people in Switzerland and another 25,000 in the rest of the world, out of the approximately 122,000 total employees. UBS said it aims to save about $6 billion, but without giving details. More information will probably arrive on Friday, when the shareholders’ meeting, meeting in Zurich, will be called to approve, in addition to the accounts, also the appointment of the new CEO, the Swiss Ermotti (born in Lugano), in place of the Dutch Ralph Homers.

Today, however, the Credit Suisse meeting will be held. The shareholders are on a war footing, because they contest not only the smallness of the price paid by UBS (3 billion francs or 76 cents per share) compared to the 7.4 billion francs of market capitalization of the institution in the last trading session before the bailout (or to 40 billion a few years ago), but also because the decisions taken by the State and by the regulator Finma have not passed through the shareholders’ meeting. That now they could sue.

The main funds holding 16.3 billion francs of subordinated bonds (At1) from Credit Suisse are also preparing the stamped papers, zeroed in the salvatage, while the shareholders were saved, contrary to the hierarchical order. On March 30, the largest holders of AT1 bonds appointed a multidisciplinary team of Quinn Emanuel Urquhart & Sullivan in Switzerland, the United Kingdom and the United States to represent them in discussions with the Swiss authorities and in any litigation for the recovery of the losses suffered. There is still a chance that various players will recognize and correct mistakes made in hastily orchestrating this merger, said Thomas Werlen, Managing Partner at Quinn Emanuel Urquhart & Sullivan in Switzerland, suggesting that constructive engagement with stakeholders could avert years of disputes, although prepared to pursue any necessary proceedings.

The fact that UBS’s takeover of Credit Suisse has shaken Switzerland’s image and tarnished its reputation as a financial center global. This is why the federal prosecutor is now also taking the field. That, in view of the significance of the events, he intends to proactively fulfill his mandate and his responsibility to contribute to a clean Swiss financial centre. To this end, the federal prosecutor’s office has ordered national and regional authorities to investigate and collect information to analyze and identify any crimes.