UBS to Cut Staff Up to 30% as Prosecutors Look at Credit Suisse Deal

UBS Group AG will cut its workforce by between 20% and 30% after completing its takeover of Credit Suisse Group AG, SonntagsZeitung reported, as Swiss prosecutors started gathering evidence as part of a possible criminal investigation into the deal.

As many as 11,000 employees will be laid off in Switzerland, and another 25,000 worldwide, the Swiss newspaper said, citing an unidentified senior manager at UBS. The two lenders together employed almost 125,000 people at the end of 2022 — about 30% of them in the home country. A spokesperson for UBS declined to comment on the report.

In a separate development, Switzerland’s Office of the Attorney General said Sunday it had opened a probe into the takeover and was working to identify possible crimes. The top federal prosecutor ordered national and regional authorities to investigate, according to a statement.

Years of scandals at Credit Suisse culminated in massive deposit outflows which would have seen it collapse the following Monday had action not been taken, according to Switzerland’s finance minister. The emergency takeover of Credit Suisse by its larger competitor in a $3.3 billion deal was announced by the Swiss government on March 19 after five days of talks brokered by officials.

The number of predicted layoffs described by the newspaper dwarfs the 9,000 that Credit Suisse announced before its rescue by UBS. The final total was expected to reach a multiple of that number given the rivals’ sizable overlap.

Publicly, UBS has said it will give clarity on job cuts as soon as it can. While it was clear that major layoffs were coming, the lender sees retention of talent as a significant part of the takeover’s execution risk.

Firms such as Deutsche Bank AG, Citigroup Inc. and JPMorgan Chase & Co. are gearing up to recruit some of the investment bankers and wealth managers likely to be let go. Already, headhunters saw themselves swarmed by Credit Suisse bankers seeking new jobs, as people from more than a dozen firms told Bloomberg last month.

Limited Impact

The government resorted to emergency law to push through the deal without having to seek shareholder approval. So while the annual general meetings of the two lenders — coming up this week — are expected to host many angry investors, shareholder impact will be limited.

Important shareholder Norges Bank Investment Management, the sovereign wealth fund of Norway, has announced it will vote against the reelection of several Credit Suisse directors, including chair Axel Lehmann.

Separately, the Financial Times reported on Saturday that UBS has a short list of four management consultants to advise on integrating Credit Suisse. The bank is soon to decide between Bain & Company, the Boston Consulting Group Inc., McKinsey & Co Inc and Oliver Wyman Inc, the newspaper reported, citing people familiar with the process who weren’t identified.

It’s expected to be one of the most lucrative contracts in years for dispensing financial services advice due to the complex, years-long process needed to meld the banks, according to the report.

UBS, Bain, BCG, McKinsey and Oliver Wyman didn’t immediately respond to requests for comment outside of ordinary office hours.

–With assistance from Thomas Seal.