A 14-member parliamentary commission will begin its investigation into the collapse of Credit Suisse this week, Reuters reported today (Tuesday). The probe comes three months after Swiss lawmakers rejected the government’s CHF 109 billion rescue package for its rival lender, UBS to take over the troubled Credit Suisse.

Commission Investigates the Collapse of Credit Suisse

In March, the shares of Credit Suisse, Switzerland’s second-largest lender at the time, plummeted to an all-time low, resulting in the collapse of the already-troubled banking giant. The event, which happened in the wake of the recent banking crisis in the United States, forced the Swiss government to engineer the emergency takeover by UBS. However, the government's intervention, which majorly bypassed parliament, drove Swiss lawmakers up the wall.

Last month, UBS finalized its acquisition of Credit Suisse, creating a banking giant with a balance sheet of $1.6 trillion and a workforce of 120,000. The Swiss government also backed the merger with a $10 billion loss guarantee.

However, reacting to the role of public authorities in the takeover, the Swiss Parliament in early June formally agreed to create a commission to probe the crash. Swiss lawmakers later handed the duty to a multi-party team headed by Isabelle Chassot from the centrist Mitte party.

According to Reuters, the commission will conduct its search on measures taken by public authorities before and during the emergency acquisition of Credit Suisse. It will also scrutinize the actions taken by the executive arm of the Swiss government, the Swiss National Bank (SNB), the Federal Department of Finance and the Swiss Financial Market Supervisory Authority (FINMA).

Finance Magnates reported that before UBS agreed to buy out Credit Suisse, SNB provided a credit facility of CHF 50 billion (about $54 billion) to Credit Suisse to support the bank’s liquidity and preserve investor confidence. Also, FINMA wrote off $17 billion in Credit Suisse’s additional tier one (AT1) bonds, sending global financial markets into turmoil.

Counting from this week, the commission has the next 18 months to make its findings and put forward recommendations to the Swiss government and parliament, Reuters reported.

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