The Office of the Council of States, the upper house of the Swiss parliament, has voted unanimously to set up an inquiry commission to investigate the takeover of Credit Suisse by UBS.

The Office of the National Council, the lower house of the Swiss parliament, had already backed the establishment of an inquiry commission in March.

A final decision is expected during the summer sessions held by the two houses to define the mandate and the financial resources of the commission, it was announced.

The inquiry commission will be established with the same number of members from both branches of parliament. It would be the fifth time in the history of Switzerland that such a commission is set up.

The upper house held a hearing this week with the president of the National Council, the presidents of the two audit committees (GPK) and the federal chancellor on the question of setting up a Parliamentary Inquiry Committee (PUK) to investigate the responsibilities linked to the takeover of Credit Suisse by UBS.

UBS bought Credit Suisse for CHF3bn (€3bn), in a deal brokered by Swiss authorities, receiving a CHF9bn guarantee from the Swiss government for potential losses resulting from the transaction.

The government backed CHF100bn default guarantee for liquidity assistance loans by the Swiss National Bank (SNB), and further liquidity backstops of CHF100bn to Credit Suisse through a special ordinance.

If the special ordinance is not transposed into ordinary law six months after taking effect, meaning by 17 September, the terms under which the extraordinary liquidity facilities have granted change, according to the regulatory filing of UBS to the US Security and Exchange Commission (SEC) submitted this week.

“There is a risk that the short-time frame and emergency circumstances of the due diligence UBS Group conducted of Credit Suisse limited UBS Group’s ability to thoroughly evaluate Credit Suisse and fully plan for its financial condition and associated liabilities,” UBS added in the filing.

UBS was approached by the Swiss government authorities on 15 May looking to find a solution for Credit Suisse at risk of collapse, and had until 19 May “to conduct limited but intensive due diligence” before deciding whether to buy the bank, it added in the filings.

“If the circumstances of the due diligence affected UBS Group AG’s ability to thoroughly consider Credit Suisse’s liabilities and weaknesses, it is possible that UBS Group AG will have agreed to a rescue that is considerably more difficult and risky than it had contemplated. This could affect the future performance of UBS Group AG, its share price, and its value as an enterprise,” it said.

UBS will also inherit litigations against Credit Suisse for the instruction given by the financial supervisory authority FINMA to write down AT1 bonds, that may lead to a “significant attenuation” in the market for such instruments more generally, it added in the filing.

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