Tuesday, April 16, 2024
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UBS to Cut Jobs in Credit Suisse Takeover

Bankers, traders, and support staff in Credit Suisse’s investment bank in London, New York, and parts of Asia are set to bear the brunt of job cuts resulting from UBS’s takeover, according to insiders familiar with the matter.

Staff members have been informed that three rounds of cuts are expected this year, with the first round anticipated by the end of July and two additional rounds provisionally scheduled for September and October. The sources, who asked to remain anonymous as the plans have not been made public, disclosed this information.

Three months after UBS agreed to acquire Credit Suisse in a government-brokered rescue, the full scope of job cuts is starting to become apparent. UBS, whose workforce increased to approximately 120,000 after the deal closed, intends to save approximately $6 billion in staff costs in the coming years.

UBS plans to reduce the combined headcount by about 30%, or 35,000 individuals, according to two insiders. This figure aligns with the estimated overall reduction of approximately 30,000 predicted by Redburn analysts in a recent report on UBS.

Shares of UBS rose by 1.4% at the opening of trading on Wednesday, reaching 17.81 Swiss francs ($19.907) as of 9:05 a.m. in Zurich.

A spokesperson for UBS declined to comment on the job cuts.

The downsizing of staff at the Swiss bank will significantly exacerbate what has already been a challenging year for financial sector employment worldwide, following similar announcements by Wall Street investment banks such as Morgan Stanley and Goldman Sachs Group Inc., which have also made substantial staff reductions.

The executive ranks of the combined firm already demonstrate UBS’s dominance. The executive board includes only one individual from Credit Suisse, Ulrich Koerner, who continues to serve as the CEO of the acquired bank. Within the key wealth management unit, only five of the more than two dozen leadership appointments come from Credit Suisse.

During an event in Zurich on Tuesday, UBS Chief Executive Officer Sergio Ermotti stated that the integration was progressing “very well.”

UBS signaled its intention early in the acquisition process to significantly reduce the workforce at Credit Suisse’s unprofitable investment bank, which was responsible for the $5.5 billion loss in the Archegos Capital Management scandal in 2021.

While UBS had initially planned to retain the top 20% of dealmakers, particularly those specializing in technology, media, and telecommunications, many high-performing bankers have already left or been recruited by competitors, according to sources. In recent months, Deutsche Bank AG, Jefferies Financial Group Inc., and Wells Fargo & Co. have all hired former Credit Suisse staff.

UBS aims to retain the majority of Credit Suisse’s private bankers, although several have already departed, according to two insiders. In the Asia Pacific region, UBS plans to retain a few hundred Credit Suisse private bankers, increasing its total to more than 1,200, as reported by Bloomberg earlier this month. Some private bankers in Singapore are expected to relocate to UBS’s flagship offices near a prime shopping district in the city-state as early as next month, signaling one of the initial tangible steps toward the completion of the merger.

Furthermore, the bank will need to retain individuals responsible for managing Credit Suisse’s structured loans to affluent clients and the equity derivatives books, at least in the near term, according to one of the sources.

Regarding the Swiss domestic business, UBS plans to make a decision in the third quarter on whether to fully integrate it with its own Swiss unit or pursue alternative options such as spinning it off or taking it public. The fate of the Swiss bank has garnered significant attention, as Swiss-based companies and politicians have expressed concerns over the combined bank’s market power.

Therefore, the initial job cuts are likely to exclude positions related to the extensive overlap in the Swiss businesses, according to the sources. If the two domestic businesses are merged, as many as 10,000 jobs could be eliminated, one individual stated. Around 30% of the megabank’s combined staff is located in Switzerland, spread across domestic businesses, as well as employees based in the country working in corporate functions, wealth management, and asset management.

Ermotti has stated that the “base case scenario” is for UBS to retain Credit Suisse’s domestic unit. Based on comments from Ermotti and Chairman Colm Kelleher in meetings and town halls this month, many employees expect the businesses to be fully merged, especially following the deterioration of Credit Suisse’s domestic private banking division, the sources revealed.

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