The purchase of Credit Suisse by UBS will be accompanied by a complex integration that will require a deep restructuring of the investment banking area of the failed entity and resolve the enormous overlaps in personnel between the two corporations. They add up to more than 120,000 workers worldwide and the buyers themselves are aware that adjustments are inevitable.
On the same Sunday, the day the agreement for the purchase of Credit Suisse for just over 3,000 million euros was closed, the president of UBS, Colm Kelleher, already reported the possible sale or closure of the investment banking business of Credit Suisse and suggested staff cuts. "We will be considerate employees, but we have to do it rationally, carefully," he said.
The big question now is how many jobs can be destroyed. UBS has 74,000 employees worldwide, compared to Credit Suisse's 30,000, and Swiss unions believe the cut may be significant at home, with administrative job cuts and office closures. "The jobs of many employees are at risk," said the Swiss banking union SBPV.
The CEO of UBS, Ralph Hamers, assured on Sunday, in the conference with analysts to present the operation, that the objective was to reduce costs associated with cutting staff by 6,000 million dollars (5,580 million euros) as part of a plan broader adjustment of 8,000 million dollars per year until 2027. Another 2,000 million correspond to expenses in information technology.
The buyers' plans include tackling most of the layoffs at Credit Suisse's home business and its investment banking, which employs some 30,000 people, according to the Financial Times. The total adjustment could affect 40,000 workers, that is, a third of the combined workforce of both corporations.
Credit rating agency Moody's has downgraded UBS's rating citing precisely the complexity of the pending restructuring at Credit Suisse, as well as the "extent and duration of the integration." At the end of last year, the failed bank already launched a restructuring plan that included the elimination of 9,000 jobs, of which about 4,000 have already left the entity.
Credit Suisse has 17,000 employees in investment banking, which is now the most fragile part of the business. In Spain it employs around 400 people, with a special focus on the management of large assets, which is a very profitable activity. By selling its business in the country to Singular Bank last year, UBS vowed not to return for three years. This agreement would force him to sell or close Credit Suisse's Spanish office, or pay a penalty if he wants to continue.
Credit Suisse's annual labor costs are around 8.8 billion Swiss francs (8.84 billion euros). "We will work diligently in the new phase to identify which positions could be affected," Credit Suisse CEO Ulrich Körner and bank president Axel Lehmann said yesterday in a message to the staff. "Where necessary, we will communicate it to those affected according to the specificities of each country."
The forecast is that the merger will be addressed in the second half of the year. In Switzerland, the operation has generated great discontent among political forces and various groups, including calls for a spin-off of the Swiss business of Credit Suisse to preserve jobs.
In the area of investment banking, the cuts come largely from the drought in company purchase and sale operations and IPOs in recent months, which have already forced corporations such as Goldman Sachs or Blackrock to cut thousands of positions in everyone. This business is characterized by the elitist profile of bankers and high salaries.
