UBS : Banking major UBS will cut 50% of Credit Suisse’s workforce from July, reports Reuter. Quoting Bloomberg News, Reuters says that these job cuts follow UBS’ takeover of Credit Suisse in June. This merger has resulted in a “Swiss banking and wealth management giant with a $1.6 trillion balance sheet and a workforce of 120,000.”
Most of the job cuts are in banking, trading and the support staff functions. The affected jobs are located in London, New York and parts of Asia.
UBS eventually wants to cut its workforce by 30% or 35,000 jobs. Credit Suisse has 45,000 employees.
Reuters had warned last week that UBS might cut its workforce in June.
Background of acquisition
CNBC reported in mid-June that “UBS had formally completed the takeover of its rival Credit Suisse”.
Sergio Ermotti, the newly-appointed CEO of UBS said that “Instead of competing, we’ll now unite as we embark on the next chapter of our joint journey.”Ermotti also said that UBS would never abandon its strong culture.
UBS is known for its conservative risk culture. Banking experts say that Credit Suisse failed because of risk management failures over several years.
Post the acquisition, both banks will work as separate entities “at least for the short term,” reported CNBC. Credit Suisse is known for its retail assets.
Rescue deal
Forbes says that UBS agreed to acquire Credit Suisse for $3.2 billion in a rescue deal. This was an all-share deal “with Credit Suisse investors receiving one UBS share for every 22.48 Credit Suisse shares held.”
In May 2023, Credit Suisse informed regulators that it found “material weaknesses” in its 2021 and 2022 financial reporting processes. In response, the bank’s principal backer Saudi National Bank stopped buying any more shares in Credit Suisse.
Credit Suisse also failed because of the collapse of two US banks- Silicon Valley Bank and Signature Bank.
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