UBS Layoff 2023 | Will UBS fire Credit Suisse employees?

Why UBS Layoff in 2023? Due to the bank’s acquisition, UBS Group plans to reduce Credit Suisse’s workforce by more than half starting next month. The study stated that practically all activity at Credit Suisse’s investment bank in London, New York, and several regions of Asia is at risk. Also, bankers, traders, and support employees are expected to bear this brunt.

UBS plans to lower the combined staff by roughly 30%, or 35,000 workers, with Credit Suisse’s headcount now at about 45,000. If the Swiss domestic businesses of the two banks were combined, up to 10,000 jobs might be lost. Credit Suisse and UBS refused to respond to the news.

Sergio Ermotti, chief executive officer of UBS, warned earlier this month of difficult decisions on layoffs. In June, UBS finished its emergency acquisition of troubled rival Credit Suisse. It created a massive Swiss banking and wealth management company with a $1.6 trillion balance sheet and 120,000 employees.

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About UBS

The Swiss-based UBS Group AG was established as a global investment bank and provider of financial services. It has a presence in all significant financial hubs as the largest private bank in the world. It is also the largest banking institution in Switzerland, with co-headquarters in Zürich and Basel.

The strict bank-client privacy and banking secrecy culture are UBS customer services trademarks. The Financial Stability Board views the bank as an important worldwide bank. It’s due to its significant market positions in the Americas, EMEA, and Asia Pacific.

Besides private banking, UBS offers private, corporate, and institutional clients various services. It includes global wealth management, asset management, and investment banking services. UBS controls most of the world’s private wealth and counts over half of all billionaires among its clientele.

UBS cut off Employees after the Credit Suisse merger

ubs layoff

There are a growing number of mass layoffs by IT behemoths and other companies worldwide. Now, the turbulence in the banking industry is exacerbating the situation. The global banking industry is seeing back-to-back collapses. It started with Silvergate Bank and SVB Bank, followed by Signature Bank and Credit Suisse.

And now there are reports that up to 36,000 jobs could be lost worldwide. It is a result of the rescue deal that resulted in the merger of Switzerland’s largest bank, UBS, and its rival, Credit Suisse. In the latter part of last year, Credit Suisse had already made plans to fire 9,000 workers.

The Swiss government hurriedly organized the Credit Suisse sale by UBS on March 19. This is being done to stop a global financial meltdown after concerns about spillover from the failure of American banks.

UBS declared in March 2023 that it would rehire former CEO Sergio Ermotti. They chose this action to take on the enormous risks associated with the rescue plan. The Swiss banking behemoth struck to swallow up struggling rival Credit Suisse.

According to an AFP investigation, the SonntagsZeitung weekly reported in April 2023 that management considered eliminating 25,000 and 36,000 positions. This is about 20% to 30% of the workforce.

According to the Weekly, up to 11,000 jobs could be lost in Switzerland alone. Before the merger, UBS and Credit Suisse had just over 72,000 and 50,000 employees, respectively.

UBS and Credit Suisse were among a small group of international banks assessed as globally systemically significant financial institutions. Thus, they are too large to fail. According to reports, Colm Kelleher, chairman of UBS, remarked, “There’s a great deal of risk in integrating these businesses.”

Credit Suisse was involved in many controversies. This was before its 60% share price fall on March 15, when investor confidence collapsed. It happened due to two consecutive bank failures in the United States.

A $2 million fine was also imposed on Credit Suisse, the second-largest bank in Switzerland. It was involved in a money laundering case linked to a cocaine network in Bulgaria.

UBS executives pushed to avoid employment layoffs and salary hikes

Concerned UBS investors urged the Swiss institution. They stressed the need to avoid wide-ranging job cuts and increase executive compensation in April 2023. They expressed worries about the emergence of a megabank following the emergency buyout of a smaller competitor, Credit Suisse.

UBS executives said they understood why investors could be “bewildered or even angry” after last month’s sudden deal. This came amid weeks of concern about the strength of the banking sector. They addressed more than 1,100 shareholders at the St. Jakobshalle stadium in Münchenstein, close to Basel.

UBS chairman Colm Kelleher remarked, “It was a historic day and a day we wished would not happen.” Yet, it is an important milestone for Switzerland, the global financial sector, UBS, and Credit Suisse.

After Silicon Valley Bank collapsed, panic over the health of the global financial system grew. This led to the sale of Credit Suisse to UBS. At that point, Credit Suisse was already having trouble retaining clients. They also struggle to profit due to many scandals, compliance problems, and unsuccessful business ventures.

Midway through March, the Saudi National Bank, the bank’s largest shareholder, decided against providing more capital. This was due to rules that restricted its involvement. This decision destroyed confidence in the company.

The Swiss government intervened, providing a CHF 50 billion (£45 billion) line of Credit. They paved the way for a $3.25 billion buyout by a larger domestic rival, UBS, which competes with Credit Suisse.

Shareholders of Credit Suisse expressed their outrage at the cut-price acquisition agreement. It happened at the bank’s final annual general meeting. They opposed executive pay plans and board members being “put behind bars.”

The employment status of Credit Suisse employees is about to be determined:

Deep layoffs were expected at Credit Suisse, the bank that local rival UBS took over in an emergency rescue one weekend in March. The size of the anticipated cutbacks is still startling.

Beginning in July, more than half of Credit Suisse’s global staff will be reduced, based on reports. Unnamed sources with knowledge of the situation cited the news. It will cover more than 20,000 people in total. More people work there than at Blackstone, Jefferies, Lazard, and Moelis.

According to studies, besides those in London and certain Asian sites, Credit Suisse bankers, traders, and support personnel in New York would suffer the most from the layoffs.

In March, insiders and outside recruiters from Credit Suisse claimed that they expected many investment banking division personnel to lose their jobs. It includes stock research analysts and traders.

The founder of the London-based staffing agency Spartan International, Oliver Rolfe, stated, “Credit Suisse’s investment banking division is in serious trouble.” Regarding Credit Suisse and UBS, “there is a lot of overlap.”

Such drastic cuts, which come after a series of calls on Wall Street, have a tremendous psychological impact. More than 3,000 jobs have been cut at Goldman Sachs, 3,000 at Morgan Stanley, and hundreds at JPMorgan Chase and Citigroup. The cutbacks come after a dry spell in deal-making and predictions of a wider US economic recession.

Many Wall Street layoffs have been happening in waves since late last year. Ultimately, it is adding to the stress for financial professionals. According to Bloomberg, the cutbacks for UBS in July are just the first round. Two more rounds are anticipated in September and October.

According to two individuals mentioned by Bloomberg: The goal is to cut 35,000 jobs from the combined UBS-Credit Suisse workforce.

Before financial problems compelled Swiss regulators to act, Credit Suisse had already reduced its personnel. In the first quarter, clients of the Swiss bank withdrew $69 billion.

Conclusion

In July 2023, the first of three layoffs will result in some Credit Suisse employees losing employment. This covers employees in London, New York, and various Asian locations. The teams that oversee Credit Suisse’s structured loans to wealthy clients are expected to keep their jobs for now.

A few months ago, the UBS Group acquired the bank. UBS now has 1,20,000 employees as a result of the acquisition. At the moment, Credit Suisse alone employs around 45,000 people.

The whole headcount is meant to be reduced by 30%. By the end of the layoff rounds, more than 30,000 employees would have lost their jobs. According to reports, UBS is predicted to save $6 billion due to the second and third rounds over the coming years.

The domestic Swiss activities of Credit Suisse have not yet been fully integrated into UBS Group’s operations in Switzerland. Whether it will choose a public listing or a spinoff is uncertain. Approximately 10,000 jobs could be lost once UBS and Credit Suisse’s domestic operations are merged.

Many of Credit Suisse’s top performers have recently been lured away by other financial organizations. This includes Wells Fargo, Deutsche Bank, Jefferies Financial Group, and others.

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