UBS to fire half of Credit Suisse staff

Three waves of layoffs in July, September, and October across all regions and functions

https://www.bloomberg.com/news/articles/2023-06-2…

UBS Group AG is planning to cut more than half of Credit Suisse Group AG’s workforce starting next month as a result of the bank’s emergency takeover.

Bankers, traders and support staff in Credit Suisse’s investment bank in London, New York, and in some parts of Asia are expected to bear the brunt of the cuts, with almost all activities at risk, people familiar with the matter said. 

Staffers have been told to expect three rounds of cuts this year, with the first expected by the end of July and two more rounds tentatively planned for September and October, the people added, asking not to be named as the plans aren’t public.

Three months after UBS agreed to buy Credit Suisse in a government-brokered rescue, the full extent of the job cuts is starting to become clear. UBS, whose combined workforce jumped to about 120,000 when the deal closed, has said it aims to save some $6 billion in staff costs in the coming years. 

UBS intends to ultimately reduce the total combined headcount by about 30%, or 35,000 people, two of the people said. That’s broadly in line with an overall reduction of around 30,000 estimated by analysts at Redburn in a report on UBS this month.

Headcount at Credit Suisse currently stands at about 45,000, the people said.

A spokesperson for UBS declined to comment on the job exits. 

The cull of staff at the Swiss lender will dramatically worsen what was already a dismal year for financial sector jobs worldwide, after Wall Street investment banks including Morgan Stanley and Goldman Sachs Group Inc. announced their own cuts of thousands of staff.

The combined firm’s executive ranks already display UBS’s dominance. The executive board contains only one Credit Suisse holdover, Ulrich Koerner, who remains CEO of the acquired bank. In the key wealth management unit, only five of the more than two dozen leadership appointments come from Credit Suisse.

UBS Chief Executive Officer Sergio Ermotti said that the integration was going “very well,” at an event in Zurich on Tuesday. 

UBS signaled early in the takeover that it intends to drastically cut back the numbers at Credit Suisse’s loss-making investment bank, which was the source of the $5.5 billion loss in the Archegos Capital Managementscandal in 2021. 

While UBS had originally planned to keep the top 20% of dealmakers, in particular those focusing on technology, media and telecoms, many of the top performing bankers have already departed or been poached by competitors, people said. Deutsche Bank AGJefferies Financial Group Inc. and Wells Fargo & Co. are among competitors who have snapped up Credit Suisse staff in recent months.

UBS is hoping to retain the majority of Credit Suisse’s private bankers, though many have already left, two of the people said. In Asia Pacific, UBS is planning to keep a few hundred Credit Suisse private bankers, bringing its total to more than 1,200, people familiar told Bloomberg earlier this month. Some private bankers in Singapore are set to relocate to UBS’s flagship offices near a prime shopping district in the city-state as soon as next month in one of the first concrete signs of the merger taking shape. 

The bank will also need to retain, at least in the near term, the people responsible for managing Credit Suisse’s structured loans to wealthy clients and the equity derivatives books, one of the people said. 

With respect to the Swiss domestic business, UBS plans to make a decision in the third quarter on whether it will fully integrate it with its own Swiss unit or seek another option such as spinning it off or listing it publicly. The fate of the Swiss bank has been widely watched as Swiss-based companies and politicians have voiced concerns over the market power that the combined bank would exercise. 

As such, the initial rounds of job reductions will likely exclude those related to the extensive overlap in the Swiss businesses, the people said. Overall, as many as 10,000 jobs would be eliminated if the two domestic businesses are merged, one person said. About 30% of the the megabank’s combined staff is in Switzerland but it is spread across the domestic businesses as well as employees who are based in the country but work for corporate functions or in wealth and asset management. 

Ermotti has said that the “base case scenario” is for UBS to retain Credit Suisse’s domestic unit. Many employees, based on comments from Ermotti and Chairman Colm Kelleher in meetings and townhalls this month, expect the businesses to be fully merged, especially after the deterioration of the private banking arm of Credit Suisse’s domestic business, the people said. 

 

As an incoming FT in IB, how seriously should I consider potential alternatives if they present themselves before my start date? How much do I weigh a guaranteed job, albeit a different job, vs. the shitstorm that I would be heading into that is CS/UBS.

 
Controversial

Sure, look at alternatives and a quick exit. But let's be real: What UBS is trying do do is a hard cut. And rather draw a clear line than slowly bleed out, right?

High-risk areas and overcapacities of CS are put on the street, synergies are realized. There is no hesitation in doing so in order to create security for the unit that will emerge from the merger. Especially in the advisory business, there should be a lot of upside from this transaction.

As an incoming FT, you are in the advantageous position of starting in a newly created unit that does not have to expect further waves of layoffs as all overcapacities have already been eliminated (big advantage over other banks, by the way). So I wouldn't worry too much.

 

Just take a look back at this past year of posts like this coping CS bankers being in an "advantageous position". Click on my profile and check the previous posts I've commented on for example. Just a few months ago the talk was about how great CSFB will be and how Klein was going to deliver incoming FTs EB salaries. Before that, the scandals were behind CS and their sponsors franchise would deliver once all that privately held dry powder is unleashed on the world. Guess what? None of that happened. 

This isn't good news for incoming FT employees. It's already very late at this point, but look elsewhere and get ahead of this before the rest of your colleagues. Everyone will understand and it's not like you're even laid off yet. Best of luck. 

 

First year analysts are relatively the cheapest labor, and there is no reason to cut them in a cost-saving perspective, especially since it’s now official that they will be bringing half of the analyst class to start in July.

 

Don't think that this is on the table. No upside, no need, high opportunity costs.

 

This is just not true... even if they fire only 500 of them who each make $150k (very low number, but let's play with 500 people) that is $75 million in savings... $150m in savings if they cut just 1000. even being the cheapest labor there is plenty of upside. The bank simply does not need 2X their analyst class especially in this market.

No one should be panicking and freaking out but incomings should certainly be keeping an eye out for interesting opportunities

 

Anything is on the table in these bank mergers. I don't think it's likely in the immediate term, but I wouldn't be sitting on the beach sipping margaritas... recruiting is never a bad idea in this situation. At the end of the day they simply don't need 2X first year IB analysts and I don't think the line is just going to be clean down the middle that July starts are the ones who are safe

 

Crazy how the same exact comments are being made with Bear switched out for CS

 

It's obvious that the coverage groups will be fine. All the cuts are going to be on product teams where most of the MD departures happened. UBS coverage is generally weaker across the board vs CS

 

does that entail that anyone joining in July in product teams will be working with UBS MDs since most have left from CS

 

So is it likely that deferred February people find out we’re axed in July, September, October?  my best guess is we get told we’re rescinded last week of July when we get the deferral (severance) payment… 

 

I personally don’t get this fear mongering on these forums. Why would they go through all these extra steps if they were planning to rescind in the first place. Why even bring on CS incomings if they’re planning to rescind before they start? Wouldn’t it have been easier to rescind without doing all this

 

it’s not fearmongering or catastrophizing when things are actually that bad… they want 30% less bankers. $30k is nothing compared to the salary of a first year analyst ($130k+) and if they needed all of us and things were good they wouldn’t be deferring people in the first place 

 

They are literally planning to cut half of CS’s work force and you think people are “fear mongering.” It’s an unfortunate situation, and I get it’s a hard pill to swallow, but please touch grass. Absolutely nobody is safe. Go find the posts from 2008 on here where Lehman pundits were vehemently defending the bank when the writing was on the wall.

 

I heard some UBS incoming FTs got a pretty sweet deal. Rumor is that some are being paid $30k to relax until February.

 

Not sure where you saw that, it's really too early to say things like that - but realistically I would be surprised if they kept the entire group of any part of the firm. UBS already has an equity derivatives group and they don't need to double in size.. more like a few key seniors and some juniors to support a slightly larger team. Even if they are keeping the group, 50% firmwide is such a deep cut that top-tier groups will likely lose 20% or more

If you are current or incoming you should be looking around, period. Don't jump for some terrible role but if you get a decent offer you should take it

 

No one can say and it really depends on what seniors are left. If there are top guys holding out for a UBS deal, then they will hold onto them and some of their juniors... if all that is left is zombie MDs they are going to use this to get rid of them.

Pretty sure product has seen significant departures already, and being "much better" is true in analyst exits land but kind of different in this situation - given you are dependent on your coverage relationships which UBS is holding onto (or trying to) - it's not like the M&A guys are out there sourcing business with industry clients

tldr, impossible to say at this time but I wouldn't assume "better" product groups are inherently safer

 
Most Helpful

Current CS employee here.

The vast majority of S&T will be laid off. Particularly fixed income. On the equities side, certain desks may be more spared than others (equity derivatives, electronic trading etc) but still expect a bloodbath. If you visit the CS trading floors, you'll see that it's completely empty right now. Literally the only bodies on the trading floors are the poor S&T summer interns, who pretty much have nothing to do. CS markets business will be decimated and everyone internally is aware.

On the IBD / Advisory side, we'll have to see. UBS is not dumb - they're fully aware that the bulk of the best talent at CS have already left. The few quality senior IBCM bankers that UBS wanted to retain have already signed offers from UBS guaranteeing their job. The junior CS folks (VP and below) are still a question mark, but base case is that they'll heavily prune most groups (half will get cut, half will make it through etc) but it won't be a flat out complete bloodbath like in the CS markets division. Obviously certain exceptions here and there for specific groups but this is generally the view internally.

The big question is on the Leveraged Finance / Sponsors side, which makes up the core of the CS IBD business (historically almost 50% of the revs). The caveat is that LevFin markets are dead right now, and not many people are left as bulk of the core senior LevFin folks left to Santander and Wells Fargo (WFC literally did a ~50% team uplift of the CS FSG group earlier this month), but there are still a few quality senior MDRs remaining who have remained and agreed to sign on with UBS. Last I've heard interally is that UBS is currently going through CS's leveraged loan portfolio, which will probably set the tone. And it's unsure what UBS's actual appetite is to be a leading player in Leveraged Finance (CS has a good franchise but the product itself is balance sheet heavy with no real nexus to wealth management). We shall see based on how the July layoffs play out.