"UBS has said it will continue with Credit Suisse's plans to shrink its investment bank, so that the combined entity will make up no more than a third of the merged group, two of the people said."
Source: https://www.ft.com/content/5746165a-3a0c-42c7-9a2e-cb7cf5f33f46
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Comments (95)
Well theres the bad news.
Honedtly it's bad for the employees at CS AND UBS
Yeah thats a fucking huge reduction if true. Obviously, going to wait and see how it actually shakes out but it makes sense conceptually considering how UBS has been trying to reduce its IB presence and them likely not wanting to do this deal in the first place
No has any clue what actually will happen, stop guessing and wait for the report
The news also mentioned that UBS would want to reassess the spin-off case of CSFB. Does this mean that the spin-off of CFFB could still happen and might be a possibility to avoid significant cutting of IBD?
Sounds like the opposite tbh. From WSJ article it seems like they're trying to wind down the entire IB business
https://www.wsj.com/articles/ubs-in-talks-to-take-over-credit-suisse-ed932b01?mod=mhp
Am I smoking something or does that make zero sense? Why not spin it out? Winding down = you're just admitting defeat and burning the revenue source. Spin out a combo UBS/CS pure IB and it could compete. If you don't want to own that then fine, sell your shares in CSFB.
not at all an interested party here I just don't understand the rationale
Can someone share ss of the article? There's a paywall
Use 12ft.io that offsets paywall
Doesn't work for WSJ
So, can we officially term this as bailout? Would the press be obliged to call a spade, a spade?
An earlier report said this is one of the sticking points of the whole negotiation. You can just imagine Michael Klein thinking he'll get his unlimited flexibility to start a new investment bank (in the ashes of Credit Suisse) into a near independent powerhouse well-capitalized but without the traditional capital constraints of a typical large bank. And, here, this merger is now blowing up on him as UBS is required to take prudent investments and not give a member of their board of director's a blank check to buy their own investment bank and turn it in to a new franchise.
i wonder how much Michael Klein is regretting moving to CS. how could someone presumably so smart miscalculate so badly?
It's hard to say Klein miscalculated. He was on the board of CS and somehow convinced that same board to buy his investment bank, merge it into one of the largest IB's in the world with him as its leader and give him a massive equity comp package. Haven't heard anyone anywhere saying they predicted this banking crisis and merger wasn't complete (looks like it may fall apart under UBS, will have to see in next few days), so Klein hasn't really lost anything except maybe the opportunity of a lifetime for which he somehow talked himself into against incredible conflict of interest odds.
No one is infallible
Did that deal even close yet? I don't think so, it announced 1 month ago with expected close in 1H23.
There is a breakup clause dependent on the CSFB IPO where Klein just gets CS stock (rip) - my guess is he and his boutique go back to what they were doing if the deal wasn't done yet.
To me, it looks like Klein wasted 6+ months of CS time by insisting he become CEO and forcing them to buy his boutique in a spin off. Management's fault for going along with his plan and not considering alternatives
Is there any point in recruiting for CS 2024, don't see the likelihood in them even having any offers to give at this point
They already started cancelling interviews
What location/division, I have mine coming up soon
So they will shrink also the UBS team right?
Why would they?
looks like it
Seems like CS divisions are definitely on the chopping block
UBS IB is probably 1/3 of the group right now. This just means that UBS + CS will stick with the same strategy. I am sure UBS will pick up some stars from CS and get rid of some of its fat, but overall IB is bound to get larger if CSFB doesn't pan out (and CSFB doesn't look very promising right now).
Stupid question but, surely if they cut a lot of CS's IB business, then other banks would increase in IBD market share so net job losses would be (theoretically) zero - obviously assuming they hire at the same level which is unlikely.
Same idea from worker displacement, the workers being impacted are not benefiting from any net gains if they can't be rehired in a similar role with equal or better compensation
Yeah I get that. But theoretically wouldn't the other banks get extra deals that CS would've normally got and therefore require more headcount, so the overall jobs in the market stays equal? Or does it not work like that? Obviously there is no guarantee they manage to get those new jobs.
I'm just thinking in terms of the overall lateral hiring market which is already pretty dead
Anyone have advice for incomings? When will we know if we still have offers?
Incoming to which bank?
CS. Like will we still have offers / jobs until at least end of year?
same, worried
Even the management team is worried about themselves
Are we still entitled to our signing bonus?
Every large BB is focusing on growing wealth management and asset management business and cutting down investment banks. UBS and CS included
Barclays has been moving in the opposite direction since the sale of BGI.
Bump Barclays def seems like best European BB at the moment. Still expanding IB? I am incoming FT
UBS to cut CS IBD to 25% per press conference in the last hour
Bro link that shizzz, am i safe after all??
On what basis? Headcount? They could mean in terms of balance sheet, which would mean cuts would be focused on equities and perhaps leveraged finance
They said combined IBD will be 25% of the groups risk weighted assets, not that they would cut IBD down to 25% of its current size. Stop spreading misinformation. CS IB is already only 30% of the CS's RWAs.
Don't have anymore details other than what UBS chair said in conference. Can't find YT link as watched on bloomberg. Agreed not sure on what basis cuts will be on but can imagine there will have to be a headcount cut to a certain degree
"UBS Chair Colm Kelleher said during a press conference that it will wind down Credit Suisse's investment bank, which has thousands of employees worldwide."
So no spin off or just a different type of IB spin off w/less people?
No spin
what would this mean for UBS recruiting for 2024 IBD SAs?
Not good. They have an influx of qualified CS employees and even they will be laid off.
.
I mean cmon, you think UBS won't need SA in 2024? The impacts of this are uncertain I agree, but the notion that they won't hire summer interns for next year are insane.
I mean, they probably will hire SAs but the full-time offer rate will probably be lower and they won't have as many SAs. I'm assuming
CS and UBS clearly don't have good communication. CS press release said the expect the merger to close by end of year. UBS slide presentation said Q2'2023. Anyone have any idea what UBS means by 'strategic banking will be retained' while other IB businesses put in a bad bank unit to wind down? What is strategic banking?
I would listen to UBS my guy
Yeah but what does 'strategic banking' mean? Is that the advisory business
Fed will pause rate hike and market will rally
Given how reckless central banks are acting, I bet the Fed will still raise rates 25 bps
They effectively purchased a leading global WM/ AM firm and a Swiss retail bank for $8bn. Idk what multiples are in the space but sounds cheap given the legg mason and Eaton Vance deals a few years ago.
They will wind down the IB by selling what they can and shutting down the rest I.e bear the severance costs etc. ($5bn limit, the rest borne by the Swiss Govt). 3bn equity + 5bn expense cap = 8bn
Selling what they can? Would that include strong parts like advisory?
Idk where you're getting this from. If they 'sell what they can' it would just delay the merger / increase expenses which it seems like is the opposite of what they want to do. I think they're keeping NY advisory / M Klein if they'll stay but getting rid of rest of IB by largely firing everyone
Are we just completely ignoring all their liabilities?
Does NY Advisory mean the IBD division in New York? If so, does it mean NY IBD staffs are safe?
Spoke with some third parties who CS Heads have called trying to leave and sounds like UBS will either 'honor' our offers for reputations sake or fire us all
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