Credit Suisse (NYSE: CS) and UBS Group AG (NYSE: UBS) shares revamp its position on Tuesday from previous session following the emergency merger of the two lenders was the subject of an inquiry by Switzerland’s federal prosecutor.

The prosecutor has launched an investigation into possible criminal violations of the law by government employees, regulators, and executives at the two banks in connection with the state-backed acquisition of Credit Suisse by UBS Group last month, according to the office of the attorney general on Sunday.

Both UBS and Credit Suisse were on track for their largest day losses in ten days when they first dropped by around 4% before cutting their losses to remain down by 2% and 1.8%, respectively, at 1410 GMT. The European banking index outperformed them, rising 1.2% on the day.

The banks choose not to comment on the inquiry.

In an effort to calm down the unrest in the global banking industry, Swiss authorities organized the UBS acquisition of competitor Credit Suisse. Nonetheless, despite the roughly 260 billion Swiss francs in liquidity and guarantees provided by the government and Swiss National Bank, the Swiss public and lawmakers have expressed reservations about the extent of state backing supplied in the agreement (SNB).

According to Michael Field, Europe Market Strategist at Morningstar, “The government miscalculated how much hostility the people in Switzerland has for the transaction.”

Also, he said, “Words in the media this morning about a 30% labor reduction don’t help.”

According to an anonymous senior UBS management quoted by the Swiss newspaper Tages-Anzeiger on Sunday, the bank formed through the acquisition of Credit Suisse is planning a 20–30% employee reduction. Together, the two banks employ 120,000 people globally and manage $1.6 trillion in assets.

Meanwhile, statistics released on Monday revealed a reduction in sight deposits held by the SNB over the previous week, raising the possibility that Credit Suisse and UBS may have reduced their usage of the emergency funds provided to them.

SNB, Credit Suisse, and UBS declined to respond to questions on the modifications to sight deposits.