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Swiss prosecutor to investigate Credit Suisse deal, 30% reductions seen

(Bloomberg) — Switzerland’s top prosecutor opened an investigation into the takeover of Credit Suisse Group AG by UBS Group AG, while Swiss newspaper SonntagsZeitung reported that the merger could result in up to 30% of its workforce being cut.

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As many as 11,000 employees will be laid off in Switzerland, and another 25,000 worldwide, the paper said, citing an unidentified senior executive at UBS. The two lenders together employed almost 125,000 people by the end of 2022 – about 30% of them in their home country. A spokesperson for UBS declined to comment on the report.

Read more: Credit Suisse̵[ads1]7;s 9,000 job cuts are a foretaste of a takeover of UBS

Switzerland’s attorney general’s office said on Sunday it was working to identify possible crimes related to the takeover, without further specifying what it was looking for. The top federal prosecutor ordered national and regional authorities to investigate, according to a statement.

Years of scandals at Credit Suisse led to an accelerated collapse in confidence at Credit Suisse last month, culminating in the $3.3 billion government takeover of its longtime rival. The deal creates significant overlaps that are likely to lead to job losses beyond the 9,000 already planned by Credit Suisse, although executives have so far said it is too early to predict.

UBS shares rose after the open in Zurich on Monday, trading at 19.43 Swiss francs ($21.137) at 09:02.

Read more: Credit Suisse’s fate sealed by regulators days before UBS deal

Publicly, UBS has said it will provide clarity on job cuts as soon as it can. Although it was clear that large redundancies were coming, the lender sees the retention of talent as a significant part of the takeover’s implementation risk.

Firms such as Deutsche Bank AG, Citigroup Inc. and JPMorgan Chase & Co. is preparing to recruit some of the investment bankers and wealth managers who are likely to be let go. Already, headhunters were swarming Credit Suisse bankers seeking new jobs, people at more than a dozen firms told Bloomberg last month.

Read more: The triumph of UBS is also the humiliation of Swiss banking

Limited impact

The government is resorting to emergency legislation to push through the deal without having to seek shareholder approval. So while the annual general meetings of the two lenders – coming up this week – are expected to be an outlet for angry investors, they otherwise have limited ability to influence the deal.

Shareholder advisers have advised investors to vote against exempting the bank’s top executives, a step that potentially leaves members open to legal claims. Major shareholder Norges Bank Investment Management, Norway’s sovereign wealth fund, has announced that it will vote against the re-election of several Credit Suisse directors, including chairman Axel Lehmann.

Separately, the Financial Times reported on Saturday that UBS has shortlisted four management consultants to advise on the integration of Credit Suisse. The bank will soon decide between Bain & Company, Boston Consulting Group Inc., McKinsey & Co Inc and Oliver Wyman Inc, the newspaper reported, citing people familiar with the process who were not identified.

It is expected to be one of the most lucrative financial services advisory contracts in years because of the complex, years-long process needed to merge the banks, according to the report.

UBS, Bain, BCG, McKinsey and Oliver Wyman did not immediately respond to requests for comment outside regular business hours.

–With assistance from Thomas Seal.

(Adds UBS shares in fifth paragraph)

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