UBS to fire over 20,000 Credit Suisse employees
Deep cuts were expected at Credit Suisse from the moment the bank was acquired by UBS, its former local rival. Now, Bloomberg has reported that over half of Credit Suisse's employees will be fired starting next month. The job cuts will mainly affect the investment banking division of Credit Suisse. It was acquired by UBS to prevent a banking failure.
Why does this story matter?
The overlapping of jobs was an expected result of the forced marriage between UBS and Credit Suisse. Therefore, layoffs are not surprising. However, the terminations will come against the backdrop of cuts by other Wall Street giants like Goldman Sachs, Morgan Stanley, and JP Morgan. Deep cuts at Credit Suisse will further impact the banking world.
The layoffs are expected to happen in 3 rounds
Credit Suisse's headcount at the time of acquisition was 45,000. Therefore, the layoffs will affect over 20,000 of the bank's employees. According to the report, the cuts will affect bankers, traders, and support employees posted in London, New York, and some Asian locations. The layoffs are expected to happen in three rounds in July, September, and October, respectively.
UBS plans to cut combined headcount by 30%
The job cuts won't end there. UBS might fire some of its own employees too. Per Bloomberg, UBS's goal is to reduce the combined workforce by around 30%. Presently, the total headcount of UBS-Credit Suisse is about 120,000, which means the bank wants to axe nearly 35,000 people. It is unclear how many UBS employees will be affected, if any.
UBS hasn't decided the future of Credit Suisse's Switzerland unit
Out of the around 120,000 combined employees, 37,000 are in Switzerland. UBS is yet to decide whether to fully integrate Credit Suisse's unit with its own. It will make the decision in the third quarter.
UBS CEO warned of a bumpy road
UBS CEO Sergio Ermotti had warned of "waves" of difficult decisions earlier this month. He added that the coming months are likely to be "bumpy" for the new entity. Considering the size of the two banks, it was clear that the merger won't be easy. However, if it hadn't succeeded, there would have been an international financial crisis.
