WHow many employees will be laid off now? This anxious question quickly arose when the spectacular news was officially announced on Sunday evening that UBS was taking over Credit Suisse (CS). But there was no right answer. There are no plans for this yet, said Ralph Hamers, CEO of UBS. But there are certainly opportunities for growth. Together with UBS, the 50,000 employees of Credit Suisse would also have a new future. “Together we can build an even more beautiful bench.”
In the ears of CS employees, this sentence should sound like mockery, especially if they work in Switzerland. Because in the home market of the two big banks, their overlaps are greatest. Credit Suisse has 17,000 employees in the Confederation, UBS 22,000. According to estimates, it is conceivable that 10,000 to 12,000 jobs will be cut, although the union and works council will certainly insist on extending the cuts over as long a period as possible.
Significant staff cuts are to be expected across the board. Because there are both UBS and CS branches in 72 Swiss cities; a double presence will not be worthwhile in many cases. On the other hand, many duplicate functions in central administration and IT will be eliminated from now on. Client advisors in wealth management need to worry least. They should keep their previous clients as loyal as possible, now for the good of UBS.
Together, UBS and CS have 124,500 employees
On the other hand, there will be a major impact in Credit Suisse’s global investment banking. UBS management has already announced that it intends to scale back this business sharply. This should include calling off CS’s planned spin-off and spin-off of trading and consulting businesses in a revitalized unit called “Credit Suisse First Boston”. In any case, it was a brainchild born out of necessity, burdened with many conflicts of interest and therefore very controversial.
Together, UBS and CS have 124,500 employees. In the end, up to 25,000 jobs could be lost, whether through layoffs and early retirement or through the sale of businesses. This figure can indirectly be derived from the $8 billion in cost reductions that UBS aims to achieve by 2027. The majority of this is attributable to the reduction in personnel costs.
The massive downsizing of Credit Suisse initially entailed expenses in the billions for UBS. In addition, she now has to deal with the ongoing legal disputes at CS. It is questionable whether the provisions already made for this are sufficient. Precisely because of such imponderables, the UBS share price initially fell on Monday.
Confident investors grab it
Andreas Venditti, analyst at Bank Vontobel, points out that UBS has changed its profile with the takeover of the scandal-plagued problem child Credit Suisse. “Anyone who had invested in UBS before this transaction knew that it was a profitable bank that promised attractive returns thanks to share buybacks and dividend payments,” said Venditti in an interview with the FAZ. the details and risks of which are not yet foreseeable.
Investors who wanted nothing to do with it sold their shares on Monday. But then investors who see opportunities rather than risks in the takeover would have gained the upper hand. According to Venditti, this explains why the UBS price climbed 12 percent to CHF 19.40 on Tuesday. In the course of Wednesday, however, things went slightly downhill again.
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