Swiss Exchange launches bank merger insider-trading inquiry

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The Swiss Stock Exchange is to investigate alleged insider trading in the run-up to last Monday's multi-billion pound merger between Swiss banking giants UBS and SBC. Mounting merger speculation sent shares in the two banks soaring last week. And merger rumours continued to envelope many of Europe's leading financial institutions yesterday, including NatWest and Barclays, sending banking shares sky-high.

"There are some peculiarities about the trading volume and price developments," said a spokesperson for the Swiss Stock Exchange, explaining the decision to open an insider-trading inquiry. But the Exchange stressed that its investigations were still preliminary and routine. It will shortly decide whether last week's trading patterns warrant a full investigation.

On Monday, the Union Bank of Switzerland (UBS) and the Swiss Bank Corporation (SBC) announced plans to merge, creating the world's second largest bank with assets of more than pounds 350bn. The proposed deal will lead to 13,000 job losses world-wide, including 3,000 in the City of London. City analysts said yesterday that more job losses were likely in the continuing consolidation of the financial services sector.

Barclays Bank and National Westminster Bank were the main targets of UK speculators yesterday. Shares in Barclays closed at 1639p, slightly off the day's high, but 66p up on yesterday's close. NatWest closed up 18p at 1016p.

Barclays and NatWest have been shrouded in takeover rumours for several months, and Barclays is understood to have had informal discussions with its banking rival. Any deal between the two would be subject to in-depth scrutiny by the competition authorities.

Analysts said yesterday that a Barclays-NatWest link-up would make good commercial sense, but warned it could cost thousands of UK jobs.

"Merger mania" was not confined to the UK shores. In Switzerland, shares in Credit Suisse, the second-largest Swiss bank, were up on merger rumours.