UBS Prepares to Cut More Than Half of Credit Suisse Workforce

UBS Group AG plans to reduce more than half the Credit Suisse Group AG workforce of 45,000 employees starting next month, as a result from the bank’s takeover.

People familiar with the matter say that the cutbacks will affect almost all of Credit Suisse’s activities in London, New York and Asia.

The people who asked not to be identified said that the staff should expect three rounds of reductions this year. One round is expected to take place by the end July, and the other two are tentatively scheduled for September and Octember.

The full extent of job cuts are starting to be revealed three months after UBS agreed with the government to rescue Credit Suisse by buying it. UBS’s combined workforce increased to 120,000 after the deal was closed. The company has stated that it hopes to save $6 billion on staff costs over the next few years.

UBS plans to reduce its total headcount by around 30% or 35,000 employees, according to two people. This is in line with the overall reduction estimated by Redburn analysts in their report about UBS earlier this month of around 30,000 people.

UBS shares gained up to 2% on US trading.

UBS’s spokesperson declined to comment.

The mass layoffs at the Swiss lender are likely to worsen an already dismal year in financial sector employment worldwide. This follows investment banks on Wall Street, including Morgan Stanleyand Goldman Sachs Group Inc. They have also announced the cuts of thousands of employees.

UBS is already dominant in the combined executive ranks of both firms. Ulrich Koerner remains the CEO of Credit Suisse and is on the executive board. Only five of more than twenty leadership positions in the key wealth unit are Credit Suisse appointments.

At a Zurich event on Tuesday, UBS Chief executive officer Sergio Ermotti stated that the integration is “very well” going.

UBS announced early on that it intended to cut down the losses at Credit Suisse’s investment bank which caused the $5.5 billion in 2021 due to the Archegos Capital Management scam.

People said that while UBS originally intended to retain the top 20% dealmakers in the Credit Suisse team, they have been poached or left by other competitors. Deutsche Bank AG Jefferies Financial Group Inc. Wells Fargo & Co. have all taken Credit Suisse staff over the past few months. Two people confirmed that UBS hopes to retain most of Credit Suisse private bankers. However, many of them have already left. Bloomberg reported earlier this month that UBS plans to retain a few hundred Credit Suisse Private Bankers in Asia Pacific. This will bring its total up to over 1,200. As early as next month, some private bankers from Singapore will move into UBS’s flagship office near a popular shopping district of the city-state. This is the first tangible sign that the merger is taking shape.

One of the sources said that the bank would also have to retain the staff responsible for Credit Suisse’s equity derivatives and structured loans to wealthy customers, as well as the team managing Credit Suisse’s structured loan books. UBS will decide in the third quarter whether to fully integrate its Swiss domestic business with the Swiss unit, or to explore other options such as spin-off or public listing. Swiss companies and politicians expressed concerns about the market power the combined bank could exercise.

One person estimated that as many as 10,000 jobs could be lost if the two Swiss businesses were merged. Around 30% of the combined staff of the megabank is based in Switzerland, but is distributed across domestic businesses and employees who work in corporate functions, wealth management, or asset management.

Ermotti said the “base-case scenario” was that UBS would retain Credit Suisse’s local unit. According to comments made by Ermotti and Colm Kelleher at meetings and townhalls in this month, many employees expect that the businesses will be fully integrated, especially given the decline of Credit Suisse’s private banking division.