UBS Group AG acquired Credit Suisse Group AG in an emergency takeover deal. This will now result in drastic workforce reductions. Bankers, traders, and support staff in Credit Suisse’s investment bank across various locations will be affected.
The impending job cuts are anticipated to impact almost all activities within the bank. According to undisclosed sources, three rounds of layoffs are expected this year, with the first round slated for completion by the end of July.
Two additional rounds of job cuts are tentatively scheduled for September and October. The plans were not made public and were communicated to staff members, who were advised to prepare for the upcoming layoffs.
The reductions will primarily impact employees in London, New York, and certain parts of Asia. People familiar with the matter revealed these details while requesting anonymity.
Three months after UBS acquired Credit Suisse, the extent of job cuts is becoming apparent. UBS aims to save $6 billion in staff costs and plans to reduce the combined headcount by around 30%.
According to Redburn analysts, this reduction aligns with their estimated overall reduction of 30,000. The current headcount at Credit Suisse is approximately 45,000 employees, as reported by insiders.
The spokesperson for UBS chose not to provide any comments regarding the job exits.
Adding Challenges to the Financial Sector Jobs
The acquisition resulted in UBS’s combined workforce reaching approximately 120,000 employees. The job cuts are part of UBS’s long-term strategy to reduce costs and streamline operations.
The staff reduction at Credit Suisse will exacerbate an already challenging year for financial sector jobs globally. Morgan Stanley and Goldman Sachs Group Inc. have also announced significant job cuts. UBS’s executive board reflects its dominance, with only one executive from Credit Suisse remaining.
In the wealth management unit, a minority of leadership appointments come from Credit Suisse.
UBS CEO Sergio Ermotti expressed satisfaction with the integration progress during an event in Zurich. UBS plans to downsize Credit Suisse’s loss-making investment bank significantly. Some of the top-performing bankers have already left or been recruited by competitors.
Competitors looking to Retain Investment Bankers
Competitors such as Deutsche Bank, Jefferies Financial Group, and Wells Fargo have hired Credit Suisse staff. UBS aims to retain most of Credit Suisse’s private bankers, although many have already departed.
UBS plans to retain a few hundred Credit Suisse private bankers in Asia Pacific. Private bankers in Singapore may relocate to UBS’s flagship offices in the near future. UBS must retain staff responsible for managing Credit Suisse’s structured loans and equity derivatives.
UBS will decide in the third quarter whether to fully integrate or spin off the Swiss domestic business. Swiss-based companies and politicians have raised concerns over the combined bank’s market power.
UBS and Credit Suisse Merger
Initial job reductions are expected to exclude overlaps in the Swiss businesses.
If domestic businesses merge, up to 10,000 jobs could be eliminated. Switzerland accounts for about 30% of the combined staff of the megabank. UBS aims to retain Credit Suisse’s domestic unit, according to CEO Ermotti.
Given the deterioration of Credit Suisse’s private banking arm, employees anticipate a full merger of the businesses. Also, UBS CEO Ermotti and Chairman Colm Kelleher have hinted at a complete merger during meetings and town halls. Companies and politicians will closely watch UBS’s decision on the Swiss domestic business.
The fate of the Swiss bank is of concern due to the market power of the combined entity. The initial job cuts will likely exclude those related to the overlap in the Swiss businesses. The megabank’s staff in Switzerland includes employees in various roles, such as corporate functions and wealth management.