Large mergers lead to mass layoffs. Two weeks after absorbing its big competitor Credit Suisse (because it was sinking and because no one else was going to take over), UBS announced on Wednesday that it will lay off 35,000 of the 120,000 employees it has after the merger.
In the city of Zurich alone, 12,000 employees will go to the streets. New York and London will also suffer massive layoffs because UBS closes Credit Suisse's investment banking activities, which were mainly concentrated in the two Anglo-Saxon financial centers. Thousands of employees of Asian financial centers will also take to the streets.
Of the 45,000 Credit Suisse employees that UBS took over with the merger (which the Swiss authorities backed because otherwise UBS was not going to take over), half will go to the streets.
To reach the 35,000 laid-off workers, they will be joined by more than 10,000 people who were already at UBS before the merger. Never before has Switzerland suffered such a drain on jobs by a single decision. Of the Credit Suisse workers, only about 16,000 will eventually remain at UBS.
Most of those laid off are employees of bureaucratic tasks who after the merger find that someone was already doing at UBS what they did at Credit Suisse. Their employment thus becomes surplus for the banking giant. But there are also technical specialists who will allow small banks to access for the first time a worker profile that previously always went to the two giants.
The giant UBS absorbed in March the Crédict Suisse, on the verge of bankruptcy. Photo: REUTERS
Without notice and on holiday
The first layoffs, without notice and during the holidays, will be made in New York and London, because American and British labor regulations allow such movements.
The redundancies will arrive in Switzerland in September and the Swiss Ministry of Economy must be informed of the social plan planned for those dismissed.
A screen shows shares plunging at Credit Suisse bank in Zurich in an image from March. Photo: REUTERS
Senior employees should have 12 months' notice and generous compensation. Those who have been at Credit Suisse for fewer years will have just three months' notice and the compensation will be lower.
The good news for many is that unemployment in the country is at 2%, which allows us to hope that everyone who wants to can find another job. In addition, the Swiss economy needs above all qualified employees.
The bad news for Switzerland is that it is confirmed that the Zurich financial center takes such a blow with the collapse of Credit Suisse and the merger with UBS that it will hardly compete again in the medium term with the other large financial centers of the planet.
Calculi
UBS estimates that with the layoffs of those 35,000 people, 30% of the combined two Swiss banks after the merger, will save about 6,000 million dollars over the next few years.
Sangria seems like a piece of cake to some. Sergio Ermotti, chief executive of UBS, said the merger was going from strength to strength.
UBS's acquisition of Credit Suisse came as markets began to attack the weaknesses of the first Swiss giant shortly after the collapse of several U.S. regional banks, especially after the collapse of Silicon Valley Bank.
On June 1, Goldman Sachs announced that its layoff plan for this year would increase to 3,450 employees. Morgan Stanley estimated to lay off more than 3,000 people this week.
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