Credit Suisse’s 9,000 job cuts foreshadow UBS takeover

Even before Credit Suisse Group AG entered crisis talks over the weekend, the Swiss lender was in the process of cutting 9,000 jobs in an effort to save itself.

This is only the beginning, according to people familiar with the discussions, should the firm be pushed into an acquisition by rival UBS Group AG, with one person estimating the final toll could be a multiple of that number.

Together the two lenders employed around 125,000 people at the end of last year, of which around 30% were in Switzerland. Government-mediated talks to stave off a crisis of confidence halted Credit Suisse early on Sunday, people familiar with the matter said, as the firm pushed back against an offer by UBS to buy it for about $1 billion.

Bloomberg reports that if a deal goes through, one possible scenario would see UBS buy Credit Suisse to acquire its wealth and asset management units, while possibly divesting others. Switzerland, where some 37,000 employees of the two firms are based, could see huge cuts in Zurich-based Credit Suisse’s group operations.

There is also talk about the fate of Credit Suisse’s profitable Swiss Universal Bank, which is potentially attracting UBS but could leave the domestic banking sector too concentrated. UBS could try and keep the private banking business of the Swiss entity, which manages about half the assets for wealthy clients at Credit Suisse.

In Asia, where the two firms are among the largest money managers, a deal risks clients who currently have money with both firms moving a portion of it to avoid too much exposure to one firm. move to a competitor. Fiennes estimated that several thousand jobs could be cut there in a deal.

The talks also raised questions about the investment banking operations that Credit Suisse was planning to launch under the storied First Boston brand. The lender was already in the process of scaling back trading operations, and sold its securitized product portfolio.

Credit Suisse Chief Executive Officer Ulrich Körner said on Tuesday that he had cut the workforce by about 8%.