This weekend, news emerged that the Swiss bank UBS will acquire its competitor Credit Suisse for just over three billion euros, which is expected to calm investors after a significant drop in the shares of this Swiss bank.
The turbulent financial market remains unsettled, and the problem now arising as a result of UBS’s rescue is the elimination of tens of thousands of jobs.
According to the Financial Times, it is expected that Credit Suisse’s domestic operations and its investment bank, which together employ more than 30,000 employees, will bear the brunt of the cuts. Although it is currently uncertain how many employees will be laid off, it is anticipated that more than a third of jobs in the combined group will be eliminated as UBS shuts down a large part of the investment bank and eliminates overlapping roles in Switzerland.
The acquisition was orchestrated by Swiss authorities over the weekend after they became concerned about the rate of client withdrawals that Credit Suisse suffered last week. The deal has been criticized due to the losses incurred by bondholders and the lack of shareholder votes on the union.
Credit Suisse, which employed just over 50,000 people at the end of 2022, was already in the midst of extensive layoffs, but the acquisition is expected to result in many of the 17,000 investment bankers at Credit Suisse losing their jobs as UBS shuts down most of the unit.
Great Need for a Crisis Team
In a conversation with analysts on Sunday evening after the announcement of the deal, UBS CEO Ralph Hamers stated that he would aim to eliminate eight billion dollars in costs annually by 2027, with six billion dollars coming from staff reductions and two billion dollars on IT spending.
In a staff letter on Monday, Credit Suisse CEO Ulrich Körner and Chairman Axel Lehmann stated that decisions regarding jobs are yet to be made.
– We will work at an accelerated pace over the coming period to identify which roles may be affected. When necessary, we will communicate with the affected individuals in accordance with state-specific guidelines and policies – they stated.
The acquisition is expected to be completed in the second half of the year.
From the Ethos Foundation, which represents Swiss institutional investors who collectively own between three and five percent of both banks, they announced that they are putting pressure on the Swiss authorities and UBS to separate Credit Suisse’s domestic operations, which employ just under 17,000 people.
– This would preserve jobs and maintain healthy competition, ensuring the proper functioning of our economy – they explained.
Separately, the Swiss Bank Employees Association has called on the management team of Credit Suisse to establish a working group to manage the risk of mass layoffs to ensure the transition goes as smoothly as possible.
