Three-quarters of investment banking jobs at Credit Suisse Group AG could be lost during the bank's integration into larger domestic peer UBS Group AG, according to a US compensation consulting expert.
The troubled Swiss group, which was rescued in a government-brokered merger with UBS in March, is facing radical restructuring over the next few years. UBS is targeting more than $8 billion in cost-cutting measures across the merged group by 2027, mostly through head count reduction, executives said on a March 19 call announcing the merger.
Credit Suisse's investment bank division is expected to bear the brunt of the cuts, as UBS plans to keep only a small part of the business as support for wealth and asset management clients.
UBS will take "bits and pieces," but "you would expect 75% of people will eventually lose their jobs in the Credit Suisse investment bank," Alan Johnson, managing director of compensation consulting firm Johnson Associates, told S&P Global Market Intelligence.
Credit Suisse and UBS declined to comment when contacted by Market Intelligence.
Tighter job market
Credit Suisse had about 17,000 employees in its investment banking unit globally at the end of 2022, with two main hubs in London and New York, according to the Financial Times.
Amid growing uncertainty, "a wave of unsettled Credit Suisse bankers" were looking for new jobs, reaching out to recruiters in the week after the merger with UBS, Logan Naidu, CEO of London-based recruitment consultancy Dartmouth Partners, told Market Intelligence.
The Credit Suisse bankers are entering a tighter job market where most large investment banks are slowing down hiring, Johnson said.
UBS is yet to release a detailed plan for the restructuring and planned job cuts at the investment bank and the whole franchise, which has a combined head count of about 120,000.
Restructuring
UBS Chairman Colm Kelleher said on the March 19 call that most of Credit Suisse's trading business will be run down, while UBS' former CEO Ralph Hamers, who resigned shortly after the merger, said the group could keep some of the advisory and capital markets operations based in the US as they are "a very good fit to our strategy."
UBS aims to cut the size of the investment bank of the combined UBS-Credit Suisse group to 25% of group risk-weighted assets, the executives said. The integration of the two firms brings tangible execution and legal risks, analysts have said.
As of Dec. 31, 2022, Credit Suisse had 50,480 employees worldwide, of which 16,700 were in Switzerland, the bank said in its 2022 annual report. No separate figures were provided for the investment banking unit.
The layoffs across the merged Credit Suisse-UBS group are currently estimated at up to 30,000, according to an April 1 report by Swiss newspaper Tages-Anzeiger, citing a UBS insider familiar with the integration plans. About 11,000 jobs were at risk in Switzerland, according to the report.
Previously, Swiss research institute BAK Economics estimated the merger could result in 9,500 to 12,000 redundancies in Switzerland.
The pace of layoffs would likely be more gradual and spread out across several years, as massive job cuts over a short period, especially in Switzerland, would be difficult politically, Johnson said.