December 3, 2023

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UBS is preparing to cut more than half of Credit Suisse’s workforce

UBS is preparing to cut more than half of Credit Suisse’s workforce

(Bloomberg) — UBS Group AG plans to cut more than half of Credit Suisse Group AG’s workforce of 45,000 people starting next month as a result of the bank’s emergency takeover.

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Bankers, merchants and support staff at investment bank Credit Suisse in London, New York and in some parts of Asia are expected to bear the brunt of the cuts, with nearly all activities at risk, people familiar with the matter said.

The people, who asked not to be named, added that employees have been told to expect three rounds of cuts this year, with the first round expected by the end of July, and two more rounds tentatively scheduled for September and October.

Three months after UBS agreed to buy Credit Suisse in a government-brokered bailout, the full extent of the job cuts is starting to become clear. UPS, whose combined workforce jumped to about 120,000 when the deal closed, said it aims to save about $6 billion in personnel costs in the coming years.

Two of the people said UBS eventually plans to cut its combined total headcount by about 30%, or 35,000 people. This is broadly in line with the overall cut of around 30,000 that analysts at Redburn estimated in a report on UBS this month.

Shares of UBS were up 1.4% at the open on Wednesday, trading at 17.81 Swiss francs ($19.907) as of 9:05 a.m. in Zurich.

A UBS spokesperson declined to comment on the job departure.

The employee culling at the Swiss bank will exacerbate what was already a dismal year for financial sector jobs around the world, after Wall Street investment banks including Morgan Stanley and Goldman Sachs Group Inc. , for downsizing thousands of employees.

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The merged company’s executive ranks already show UBS’s dominance. The Executive Board includes only one Credit Suisse holder, Ulrich Koerner, who remains CEO of the acquired bank. In the main wealth management unit, only five out of more than two dozen leadership appointments come from Credit Suisse.

UBS CEO Sergio Ermotti said the merger is going “very well,” at an event in Zurich on Tuesday.

UBS indicated early in the acquisition that it intended to cut numbers significantly at loss-making investment bank Credit Suisse, which was the source of the $5.5 billion loss in the Archegos Capital Management scandal in 2021.

While UBS originally planned to keep the top 20% of dealmakers, particularly those focused on technology, media and telecoms, many of the top-performing bankers have already left or been taken over by competitors, the people said. Deutsche Bank AG, Jefferies Financial Group Inc and Wells Fargo & Co. are among the rivals that have hired Credit Suisse employees in recent months.

Two people said UBS hopes to keep the majority of Credit Suisse’s private bankers, even though many have already left. In the Asia-Pacific region, UBS plans to keep a few hundred private bankers at Credit Suisse, bringing their total to more than 1,200, people familiar told Bloomberg earlier this month. Some private bankers in Singapore are set to move into UBS’s main offices near the city-state’s main shopping district as soon as next month in one of the first concrete signs of a merger.

The bank will also need to retain, at least in the near term, the people responsible for managing Credit Suisse’s structured loans for wealthy clients and the equity derivatives books, one of the people said.

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In terms of the Swiss domestic business, UBS plans to decide in the third quarter whether to fully merge it with its own Swiss unit or look for another option such as spinning it off or going public. The fate of the Swiss bank was widely watched as companies and politicians in Switzerland expressed concerns about the market power that the consolidated bank would wield.

As such, the initial rounds of job cuts are likely to exclude those related to the broad overlap in Swiss companies, the people said. Overall, up to 10,000 jobs would be eliminated if the two domestic companies merged, one person said. About 30% of the combined bank’s employees are based in Switzerland but are spread across local companies as well as employees based in the country but working in corporate functions or in wealth and asset management.

Ermotti said the “base case scenario” is for UBS to retain Credit Suisse’s local unit. People said that many employees, based on comments from Ermotti and Chairman Colm Kelleher at meetings and public boards this month, expect the business to be fully integrated, especially after the decline of Credit Suisse’s local business private banking arm.

— With assistance from Ambryn Choudhury, Stephen Aarons, Kathy Chan, Crystal Tse, Kathryn Griffiths, and Bastian Penrath.

(Updates with posts in sixth paragraph)

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