UBS has
finalized a takeover transaction within three months that was expected to take
up to a year. The acquisition of Credit Suisse (CS), which found itself on the
brink of bankruptcy, proceeded much smoother than anticipated. However, Sergio
Ermotti, the CEO of UBS Group AG, warned that the Swiss lender may face massive
employment cuts, particularly in the investment banking sector.
An article
by Ermotti appeared in the Swiss newspaper Tages-Anzeiger on Saturday,
summarizing the decision and process of acquiring CS. According to Ermotti, the
new UBS will be a bank that all Swiss can be proud of.
However, CS
employees may not have reasons to be proud or pleased. According to Ermotti, a
‘massive downsizing’ awaits them. Although the CEO did not provide exact values or a percentage range, he emphasized that it is necessary from a cost reduction
perspective. Earlier, UBS revealed that 10% of employees left Credit Suisse
before the acquisition was finalized.
UBS Chief Executive Sergio Ermotti
Reuters
“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 and was translated to English.
Ermotti
certainly knows how to cut employment. The bank announced the need to reduce
jobs by 36,000 in April before finalizing the CS acquisition. However, the UBS
case is no exception. According to Bloomberg data, over 500,000 people
have lost jobs in significant economic sectors since last October.
What will
happen to the Swiss part of Credit Suisse’s business is also unclear. Previously, UBS
spoke about plans for full integration of the local branch. However,
Ermotti commented that various solutions, including a sale, are being considered.
The final decision was to be made by the end of this quarter, leaving less than
two weeks.
The
acquisition of Credit Suisse was formally closed last Monday. It was within three
months after UBS expressed its desire to acquire the bank’s assets for $3 billion when on the
brink of bankruptcy .
What’s Next for Credit
Suisse?
Two weeks
ago, the Swiss government reached an agreement with UBS to absorb potential
losses of up to CHF 9 billion ($10 billion) that the global lender might incur due
to its liquidation of rival Credit Suisse’s assets.
The
government had facilitated UBS’s emergency procurement of Credit Suisse in
March to avoid a potential banking and economic meltdown in Switzerland. At
that point, it pledged its readiness to bear part of any losses arising from
the sale of the troubled lender’s assets.
Meanwhile, UBS
Group AG (UBS) and Credit Suisse Group AG (CS) are maintaining their operations
in Singapore without disruption. The Monetary Authority of Singapore (MAS) has
confirmed that both banks will continue to operate under separate licenses,
preserving their core private and investment banking activities.
UBS has
finalized a takeover transaction within three months that was expected to take
up to a year. The acquisition of Credit Suisse (CS), which found itself on the
brink of bankruptcy, proceeded much smoother than anticipated. However, Sergio
Ermotti, the CEO of UBS Group AG, warned that the Swiss lender may face massive
employment cuts, particularly in the investment banking sector.
An article
by Ermotti appeared in the Swiss newspaper Tages-Anzeiger on Saturday,
summarizing the decision and process of acquiring CS. According to Ermotti, the
new UBS will be a bank that all Swiss can be proud of.
However, CS
employees may not have reasons to be proud or pleased. According to Ermotti, a
‘massive downsizing’ awaits them. Although the CEO did not provide exact values or a percentage range, he emphasized that it is necessary from a cost reduction
perspective. Earlier, UBS revealed that 10% of employees left Credit Suisse
before the acquisition was finalized.
UBS Chief Executive Sergio Ermotti
Reuters
“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 and was translated to English.
Ermotti
certainly knows how to cut employment. The bank announced the need to reduce
jobs by 36,000 in April before finalizing the CS acquisition. However, the UBS
case is no exception. According to Bloomberg data, over 500,000 people
have lost jobs in significant economic sectors since last October.
What will
happen to the Swiss part of Credit Suisse’s business is also unclear. Previously, UBS
spoke about plans for full integration of the local branch. However,
Ermotti commented that various solutions, including a sale, are being considered.
The final decision was to be made by the end of this quarter, leaving less than
two weeks.
The
acquisition of Credit Suisse was formally closed last Monday. It was within three
months after UBS expressed its desire to acquire the bank’s assets for $3 billion when on the
brink of bankruptcy .
What’s Next for Credit
Suisse?
Two weeks
ago, the Swiss government reached an agreement with UBS to absorb potential
losses of up to CHF 9 billion ($10 billion) that the global lender might incur due
to its liquidation of rival Credit Suisse’s assets.
The
government had facilitated UBS’s emergency procurement of Credit Suisse in
March to avoid a potential banking and economic meltdown in Switzerland. At
that point, it pledged its readiness to bear part of any losses arising from
the sale of the troubled lender’s assets.
Meanwhile, UBS
Group AG (UBS) and Credit Suisse Group AG (CS) are maintaining their operations
in Singapore without disruption. The Monetary Authority of Singapore (MAS) has
confirmed that both banks will continue to operate under separate licenses,
preserving their core private and investment banking activities.
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