Banking giant UBS is set to undertake a massive restructuring following its acquisition of Credit Suisse, with an estimated 35,000 jobs on the line. The cuts are expected to primarily affect bankers, traders, and support staff in Credit Suisse’s investment bank in London, New York, and certain parts of Asia. The details of the job cuts were revealed by anonymous sources familiar with the matter.
Impact of the Job Cuts
Reports suggest that UBS plans to implement the staff reductions in three phases, with the first round expected to take place by the end of July. Two additional rounds of cuts are tentatively scheduled for September and October. The bank’s intention is to save around $6 billion in staff costs in the coming years as part of the takeover.
The job cuts will significantly impact the financial sector, which has already experienced a difficult year globally due to cuts by major investment banks like Morgan Stanley and Goldman Sachs. UBS aims to reduce the total combined headcount by approximately 30%, aligning with analysts’ estimates of a reduction of around 30,000 employees.
UBS shares saw a 1.4% increase at the market open on Wednesday, reaching 17.81 Swiss francs ($19.907) in Zurich. The bank declined to comment on the upcoming job cuts.
The UBS Domination
The integration of UBS and Credit Suisse has already revealed UBS’s dominance, with only one holdover from Credit Suisse on the executive board. The wealth management unit also demonstrates the shift in power, as only five out of more than two dozen leadership appointments come from Credit Suisse.
UBS CEO Sergio Ermotti expressed satisfaction with the integration progress, stating that it was going “very well” during an event in Zurich. The bank had signaled its intention to significantly reduce staff in Credit Suisse’s loss-making investment bank, which suffered a $5.5 billion loss due to the Archegos Capital Management scandal in 2021.
UBS to Cut More Than Half of Credit Suisse Workforce
Although UBS initially planned to retain the top 20% of dealmakers, including those specializing in technology, media, and telecoms, many of the best-performing bankers have already departed or been recruited by competitors such as Deutsche Bank, Jefferies Financial Group, and Wells Fargo. UBS is hoping to retain the majority of Credit Suisse’s private bankers, particularly in the Asia Pacific region.
Decisions amid Restructuring
As the restructuring progresses, UBS faces decisions regarding the fate of Credit Suisse’s domestic business in Switzerland. The bank plans to make a decision in the third quarter on whether to integrate it fully with its existing Swiss unit or pursue alternative options such as spinning it off or listing it publicly. The fate of the Swiss bank is closely watched, as concerns have been raised about the combined bank’s market power.
Initial job reductions are expected to exclude roles associated with the overlap in the Swiss businesses. However, merging the two domestic businesses could result in the elimination of approximately 10,000 jobs. Around 30% of the combined bank’s staff is located in Switzerland, working in domestic businesses, corporate functions, wealth management, and asset management.
UBS CEO Ermotti has stated that the “base case scenario” is to retain Credit Suisse’s domestic unit. However, many employees anticipate a full merger, particularly given the decline of Credit Suisse’s private banking arm in the domestic business.
