UBS Group Plans To Reduce Over Half Of Credit Suisse's Workforce Following Takeover: Report

The report said that UBS is planning to ultimately reduce the total combined headcount by about 30 per cent or 35,000 people. Cuts will primarily be among bankers, traders, and support staff

In March of this year, UBS Group AG reached an agreement to acquire Credit Suisse in a government-brokered takeover worth $3.2 billion.

Source : Getty

Following an emergency takeover, Swiss banking giant UBS Group AG is now planning to reduce more than half of Credit Suisse's headcount starting next month, reported Bloomberg. The report citing people familiar with the matter said that UBS is planning to ultimately reduce the total combined headcount by about 30 per cent or 35,000 people. The combined workforce of UBS and Credit Suisse Group rose to 120,000 after the takeover three months ago. At the time, Credit Suisse's headcount stood at 45,000. 

People familiar with the situation told Bloomberg that these cuts will primarily be among bankers, traders, and support staff within Credit Suisse's investment bank, particularly in London, New York, and select Asian regions. However, nearly all business operations are at risk of being affected. Additionally, staffers have been told to expect three rounds of cuts this year, with the first expected by the end of July and two more rounds tentatively planned for September and October. 

In March of this year, UBS Group AG reached an agreement to acquire Credit Suisse in a government-brokered takeover worth $3.2 billion. This acquisition came in response to a global banking crisis that originated from the US financial market and caused significant turbulence in the stock market. It also exposed liquidity constraints and issues with Credit Suisse's balance sheet. Swiss regulators playing a key role in the acquisition amid worries that severe losses at Credit Suisse would destabilise the banking system. 

Earlier this month, UBS Board Chair Colm Kelleher and newly-returned CEO Sergio Ermotti in an open letter said, “We will bring together the collective expertise, scale and wealth management leadership of both UBS and Credit Suisse to create an even stronger combined firm.”

According to the report, UBS aims to save some $6 billion in staff costs in the coming years. 

The report says that this job cut at the Swiss lender will significantly exacerbate an already challenging year for global financial sector employment, following announcements of job cuts by Wall Street investment banks such as Morgan Stanley and Goldman Sachs Group Inc.

Following that takeover, UBS's dominance is evident in the executive ranks of the merged entity, the report said adding that only one executive from Credit Suisse, Ulrich Koerner, continues to serve as CEO of the acquired bank. Similarly, in the crucial wealth management unit, out of the more than two dozen leadership appointments, only five individuals are from Credit Suisse.

According to Bloomberg, even during the early stages of the takeover, UBS made it clear that it aims to significantly reduce the workforce at Credit Suisse's unprofitable investment bank, which was responsible for a $5.5 billion loss due to the Archegos Capital Management scandal in 2021. Initially, UBS had planned to retain the top 20 per cent of dealmakers, especially those specializing in technology, media, and telecommunications.

However, many of the high-performing bankers have already left or have been recruited by rival firms. Competitors such as Deutsche Bank AG, Jefferies Financial Group Inc., and Wells Fargo & Co. have recently attracted talent from Credit Suisse.

UBS aims to retain the majority of Credit Suisse's private bankers, although several have already departed, according to Bloomberg sources. In the Asia Pacific region, UBS plans to retain a few hundred Credit Suisse private bankers, increasing its total to over 1,200.

As a tangible indication of the merger's progress, some private bankers in Singapore are expected to relocate to UBS's flagship offices near a prominent shopping district as early as next month, the report said. 

The bank will also need to retain the staff responsible for managing Credit Suisse's structured loans for affluent clients and equity derivatives books, at least in the short term, the report further said. 

However, on the Swiss domestic business, UBS is set to make a decision in the third quarter. Options under consideration include fully integrating it with UBS's own Swiss unit, spinning it off, or publicly listing it.

As per the report, the initial wave of job cuts is expected to exclude positions directly related to the significant overlap in the Swiss businesses. However, if the two domestic businesses are merged, it is estimated that up to 10,000 jobs could be eliminated. Approximately 30 per cent of the combined staff of the megabank is located in Switzerland, but this includes employees in both domestic businesses and those working in corporate functions or in wealth and asset management roles based in the country.