After UBS’s takeover of Credit Suisse, thousands risk losing their jobs

After the emergency merger of Swiss banks UBS and Credit Suisse, thousands of jobs in London’s financial district are at risk of being lost.

The Swiss government intervened to limit some bonus payments as concerns about job losses grew. A state-funded bank rescue that cost billions of dollars came next.

Although the merger requires taxpayer approval to proceed as the state provided 260 billion Swiss francs (£230 billion) in funding and guarantees, the government announced it on Tuesday in response to criticism over reports regarding the distribution of bonuses.

The details of the merger are yet to be released by the two lenders regarding the fate of 5,000 Credit Suisse employees and roughly 6,000 UBS employees based in London.

Concerned that Credit Suisse’s failure may lead to a financial crisis, the Swiss government forced through the purchase of Credit Suisse by its competitor UBS on Sunday for approximately $3.25 billion (£2.65 billion), significantly below its market value at the time.

With the possibility of losing not only their bonuses but, in some cases, even their jobs, the workers are currently under pressure. The Swiss government, in an announcement, stated that the Swiss finance ministry “is temporarily suspending already granted but deferred variable remuneration for the financial years up to 2022 by means of an order to Credit Suisse.” It further added: “The only exceptions are deferred payments that are already in the process of being paid out.”

Along with other forms of compensation, the employees are promised a deferred bonus in the form of shares that would be delivered in the future to retain them.

In an interview with the Guardian, Credit Suisse stated that they anticipate as many as 20% of the employees losing their jobs across other business areas, with those based in London hitting the worst.

“There is no clarity on what this merger means for us other than there will be fewer jobs to go around. In that environment, we’re all rewriting our CVs and trying to hold it together,” one source declared.

One of the insiders replied that it was too early to declare the total number of employees who would lose their jobs. Sources confirmed that among the high performers, UBS had offered retention bonuses to some of the bank’s wealth and asset management division employees.

Credit Suisse and UBS declined to comment on whether they planned to reduce or reorganize the new joint workforce.

The merger, according to a press release from UBS announcing it, will save the expanded bank $8 billion in operating costs by 2027, which raises the possibility that overall employment and other costs will go down.

Contrary to Credit Suisse’s statement, which read: “UBS has expressed its confidence that the employment of the staff of Credit Suisse will be continued,”

Brexit has already left the city in a no-deal situation, meaning no trade agreement with the EU fully covers the financial and professional services of the UK. These new job cuts will only make matters more difficult.

Although the UK’s competitive advantages are closely related to services, which make up more than 80% of economic output, this is the case.

Under the guise of anonymity, a recruitment agency claimed that a large number of star employees from the scandal-plagued bank Credit Suisse had already left in the prior year, giving examples of employees who had been placed in new positions.

Those leaving the financial sector may find it challenging to find employment in that sector due to growing worries about economic uncertainty and institutions’ struggles to reshape their strategies in the face of higher interest rates and higher operating costs due to inflation.

As per a recruitment firm, Morgan McKinlsy, there has been a slowdown in the number of financial jobs in London by 8% in the three months to December last year.

The Swiss bank employee association cautioned on Monday that “the jobs of very many employees are at stake.”

SBPV stated on Tuesday, that it is working on a support plan for the employees with Credit Suisse, UBS, and the Swiss federal government and advised to put a hold on job cuts until 2023.

SBPV indicated in a statement that, in light of the merger, it should give priority to employees by offering state aid.

The 1980s-era high rise at 1 Cabot Square, which underwent a multi-year, £1 million renovation project, now houses Credit Suisse’s London employees. Whether that presence in Canary Wharf would be kept in addition to UBS UK’s headquarters in Broadgate, in the City, is unknown.

Overlooking Liverpool Street station, the two floors of its 12-story building were rented by UBS last year. The building is leased to it through 2035.

The demand for London’s office space had increased a little in the year to March, as per the property company data, including those from Savills.

- Published By Team Timeswire

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