News: UBS CEO warns of massive layoffs in Credit Suisse after smooth takeover

Strategic HR

UBS CEO warns of massive layoffs in Credit Suisse after smooth takeover

The decision of layoff was explained by the need to reduce costs. However, UBS did not provide exact figures.
UBS CEO warns of massive layoffs in Credit Suisse after smooth takeover

UBS successfully concluded a takeover transaction in just three months, surpassing the initial expectation of it taking up to a year. The acquisition of Credit Suisse (CS), which was on the verge of bankruptcy, proceeded more smoothly than anticipated.

Nonetheless, UBS Group AG CEO Sergio Ermotti cautioned that the Swiss lender could potentially undergo substantial job reductions, especially within the investment banking sector.

On Saturday, an article written by Ermotti was published in the Swiss newspaper Tages-Anzeiger, providing a summary of the decision-making process and the acquisition of CS by UBS. Ermotti expressed that the newly formed UBS would be a bank that instills pride among all Swiss individuals.

However, employees at CS may not find reasons for pride or satisfaction. As per Ermotti, they can expect a significant reduction in workforce, commonly referred to as 'massive downsizing.' While the CEO did not disclose specific figures or a percentage range, he underscored the necessity of such measures for cost reduction. Prior to the completion of the acquisition, UBS disclosed that 10% of employees had already departed from Credit Suisse.

"The task ahead is demanding and takes time, and difficult decisions have to be made. It requires focus, humility and open communication," Ermotti originally commented in Swiss, which was translated to English.

Following the acquisition of Credit Suisse, UBS Chief Executive Sergio Ermotti issued a cautionary statement about the need to make difficult choices regarding job cuts.

"We won't be able to create, short term, job opportunities for everybody. Synergies is part of the story. We need to take a serious look at the cost base of the standalone and combined organisations and create a sustainable outcome. It will be painful," Ermotti told a financial conference in Bern, earlier this month. 

The top bank in Switzerland, which had previously agreed in March to acquire its smaller domestic competitor as part of a rescue plan led by Swiss authorities, has expressed its intention to swiftly finalise the deal. UBS Chief Executive Sergio Ermotti expressed optimism on Friday, stating his hope that the transaction could be completed within the next few days.

This significant transaction involving two major players in Swiss finance marks the first megamerger of globally important banks since the 2008 financial crisis. In the wake of that crisis, regulators took active measures in the banking sector, restructuring institutions and facilitating mergers with rival banks, often employing regulatory intervention.

In order to mitigate potential losses stemming from UBS's acquisition of Credit Suisse, the Swiss government has committed to providing over $9 billion in support. Furthermore, the Swiss National Bank has extended liquidity support of over $100 billion to UBS, aiding in the successful finalisation of the transaction.

However, this action raises concerns about the potential impact on the employment of around 14,000 workers, especially in India who are employed in the banks' technology back offices across three cities, including Pune.

According to a report by Mint, the acquisition of Credit Suisse by UBS, with the backing of the Swiss government, is expected to have significant implications for the technology centres of both banks based in India. Each bank is reported to have approximately 7,000 employees in their respective technology centers, which are spread across three cities in India.

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Topics: Strategic HR, #Layoffs, #HRTech, #HRCommunity

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