UBS (NYSE:UBS) CEO warns of a new wave of banking layoffs which are expected to take place early this month.
Chief Executive Sergio Ermotti last week warned of painful decisions about job cuts following the takeover of Credit Suisse, which he said he hoped would be formalized in coming days, per Reuters.
“We won’t be able to create, short term, job opportunities for everybody. Synergies is part of the story,” Ermotti said at an event organized by the Asset Management Association Switzerland in Bern.
“We need to take a serious look at the cost base of the standalone and combined organizations and create a sustainable outcome,” he added.
“It will be painful.”
Ermotti led UBS from 2011 to 2020 but returned as CEO in April to oversee the biggest banking deal since the global financial crisis.
UBS agreed in March to take over Credit Suisse as part of a rescue from Swiss authorities.
Sources warned 10,000 jobs would have to be cut if the two banks combined; we’re now beginning to see the aftermath today.
“Hopefully in the next few days it’s going to be done,” Ermotti said on Friday.
“We are finalizing the last the last few miles … we have more than 170 approvals from regulators.”
“We will have a more even distribution of jobs ..than the one I did myself,” he said.
“When the dust settles down …the best thing for our clients and shareholders and our people is to have the best people in the jobs.”
Bankers at Credit Suisse Quickly Throw in The Towel
Bankers at Credit Suisse (NYSE:CS) are quickly throwing in the towel as hundreds of resignations hit the distressed bank.
Swiss newspaper Blick reported earlier on Wednesday that each day around 150 people worldwide were resigning from Credit Suisse while one of the two people said they saw about 200 resignations a week.
Credit Suisse bankers, worried about their future are seeking safer employment at competitors, one person said.
People familiar with the matter declined to be named because they are not authorized to speak publicly, per Reuters.
UBS agreed on March 19 to take over its smaller Swiss rival as part of a rescue arranged by the Swiss authorities after a bout of market turmoil brought the struggling lender to the brink of collapse.
Credit Suisse said in April that the bank’s “employee attrition has been higher over the last year,” and that it had just over 48,000 full-time employees at the end of the first quarter and reported 50,480 full-time staff at the end of 2022.
UBS management has also said it would set a “very high bar” when deciding whether to retain any of Credit Suisse’s investment banking staff.
Similarly, about 1,000 First Republic (OTCMKTS:FRCB) employees have lost their job across all of First Republic’s businesses after the JPMorgan takeover.
UBS has said it plans to wind down Credit Suisse’s investment bank, which employs about 17,000 staff, and the Swiss state has pledged 9 billion Swiss franc in guarantees to cover potential losses from the operation.
No day passes without receiving a goodbye email from someone across the bank, one of the two people said.
At the investment bank, calls are often unanswered, he added.
Credit Suisse Stock is Now in Danger of Delisting
Credit Suisse stock is now in danger of delisting from the New York Stock Exchange as it fails to meet the exchanges minimum price criteria.
“The New York Stock Exchange notified Credit Suisse on May 1… that it is no longer in compliance with the NYSE’s continued listing minimum price criteria,” Credit Suisse said in a statement end of the month.
Credit Suisse stock is currently down more than -73% this year-to-date, currently trading at $0.82 per share.
Under NYSE rules, shares must trade for at least $1.00 for 30 consecutive days to qualify for listing.
“Credit Suisse expects that the deficiency will be cured upon completion of the acquisition by UBS,” which will mean its own shares are exchanged for UBS stock and delisted in New York, the statement said.
“Upon consummation of the acquisition, UBS will be the surviving entity.
In connection with the acquisition, Credit Suisse’s ordinary shares underlying its American Depositary Shares will be exchanged for the right to receive a fraction of a UBS ordinary share and as a result delisted from the NYSE.”
In April, Credit Suisse Investors said they wanted the board of directors in jail after they blocked executive pay plans during the final ever annual meeting.
According to The Guardian, shareholders used most of the nearly five-hour annual general meeting in Zurich – the last in the 167-year-old bank’s history – to voice fury over poor management, hitting out at excessive pay for “incompetent and greedy” bankers who they said took too many risks and endangered Switzerland’s economic prosperity.
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