UBS and Credit Suisse shares fell today following news that Switzerland’s federal prosecutor has opened an investigation into the state-backed takeover of Credit Suisse by its rival UBS.

Shares in Credit Suisse dipped 1.24 percent today and in UBS they were down 2.6 percent after the attorney’s general office, led by Stefan Blättler, opened an investigation seeking “clarification” on the circumstances of Credit Suisse’s takeover by UBS and to see if it broke criminal law.

It is looking into potential breaches by government officials, regulators and executives at the two banks who arranged an emergency merger in mid-March to prevent a wider financial meltdown.

In a statement, the attorney general’s office said the action was being taken to safeguard the integrity of the Swiss financial system.

It said that it had contacted national and regional authorities and issued investigation orders, adding that it was monitoring the situation and would take immediate action on any matters falling within its remit.

The office said it was important to analyse and identify any criminal offences that could fall within its competence. No timetable was given for the probe by the attorney general.

It is the latest twist in the fast moving story of Credit Suisse’s fall and rise that has rocked the genteel world of Swiss banking in recent weeks.

The Zurich-based investment bank had been embroiled in a number of crises in recent years, with a series of investment decisions that went wrong and market concerns over how executive management was running its affairs.

Matters came to a head last month when auditors released a critical annual report into the Zurich-based investment bank, citing material weaknesses in its financial controls. Credit Suisse’s main investor, the Saudi National Bank, ruled out an injection of further funding and a full blown panic attack gripped the markets.

Investors voted with their feet withdrawing money from risky assets and Credit Suisse’s share price tanked.

The Swiss authorities moved fast to contain the crisis. The Swiss central bank offered to buy up the bank’s debt, giving it a £44.5bn lifeline and Credit Suisse’s rival, UBS, agreed to take it over in a deal worth over $3bn.

The takeover was supposed to be a market-calming move but still it did not end Credit Suisse’s travails.

The takeover proved highly controversial in Switzerland, with a poll of 167 university economists by Switzerland’s KOF economic research institute for the Neue Zuercher Zeitung newspaper finding that almost half disagreed with the move and said it could damage the country’s reputation as a financial centre.

On Wednesday, UBS announced it had brought back its former chief executive, Sergio Emotti, to supervise its merger with Credit Suisse.

Mr Emotti said the task at hand was an “urgent and challenging one”.

He said: “In order to do it in a sustainable and successful way, and in the interest of all stakeholders involved, we need to thoughtfully and systematically assess all options. I am conscious of the uncertainty many feel and I promise that, together with my colleagues, our full attention will be on delivering the best possible outcome for our clients, our employees, our shareholders and the Swiss government.”

Slimming down the newly merged entity’s 120,000 global workforce is likely to be one of his priorities, with reports that UBS is considering slashing up to 30 per cent of its employees.

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