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

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

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

Employees have been told to expect three rounds of cuts this year, with the first expected in late July and two more rounds tentatively planned for September and October, the people added, asking not to be named as the plans are not public.

Three months after UBS agreed to buy Credit Suisse in a government bailout, the full extent of the job cuts is becoming clear. UBS, whose combined workforce jumped to about 1[ads1]20,000 when the deal closed, has said it aims to save about $6 billion in personnel costs in the coming years.

UBS intends to reduce its total workforce by about 30%, or 35,000 people, two of the people said. That is broadly in line with an overall reduction of around 30,000 forecast by analysts at Redburn in a report on UBS this month.

Shares of UBS rose 1.4% at the open on Wednesday, trading at 17.81 Swiss francs ($19.907) as of 09:05 in Zurich.

A spokesperson for UBS declined to comment on the job departures.

The job cuts at the Swiss lender will dramatically worsen what was already a bleak year for financial sector jobs worldwide, after Wall Street investment banks including Morgan Stanley and Goldman Sachs Group Inc. announced their own cuts of thousands of employees.

The combined firm’s executives are already demonstrating UBS’s dominance. The executive board contains only one Credit Suisse holder, Ulrich Koerner, who remains CEO of the acquired bank. In the key wealth management unit, only five of the more than two dozen executive appointments come from Credit Suisse.

UBS chief executive Sergio Ermotti said the integration was going “very well” at an event in Zurich on Tuesday.

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

While UBS had originally planned to retain the top 20% of dealmakers, particularly those focused on technology, media and telecoms, many of the top bankers have already left or been poached by competitors, the people said. Deutsche Bank AG, Jefferies Financial Group Inc. and Wells Fargo & Co. is among the competitors that have snapped up Credit Suisse employees in recent months.

UBS hopes to retain the majority of Credit Suisse’s private bankers, although many have already left, two of the people said. In Asia Pacific, UBS plans to retain a few hundred Credit Suisse private bankers, bringing the total to more than 1,200, people familiar with the matter told Bloomberg earlier this month. Some private bankers in Singapore are set to move to UBS’s flagship offices near a prime shopping district in the city-state as soon as next month in one of the first concrete signs that the merger is taking shape.

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

As for the Swiss domestic business, UBS plans to make a decision in the third quarter on whether it will fully integrate it with its own Swiss unit or seek another option, such as spinning it off or listing it publicly. The fate of the Swiss bank has been widely watched as Swiss companies and politicians have voiced concerns over the market power the combined bank will wield.

As such, the initial rounds of job cuts are likely to exclude those related to the extensive overlap in the Swiss operations, the people said. Overall, as many as 10,000 jobs would be eliminated if the two domestic businesses merged, one person said. About 30% of the megabank’s total staff is in Switzerland, but it is spread across domestic operations as well as employees who are based in the country but work for corporate functions or in wealth and asset management.

Ermotti has said the “baseline” scenario is for UBS to retain Credit Suisse’s domestic unit. Many employees, based on comments made by Ermotti and chairman Colm Kelleher in meetings and town halls this month, expect the businesses to be fully merged, especially after the deterioration of the private banking part of Credit Suisse’s domestic business, the people said.

–With assistance from Ambereen Choudhury, Steven Arons, Cathy Chan, Crystal Tse, Katherine Griffiths and Bastian Benrath.

(Updates with shares in the sixth paragraph)

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