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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Jobs at risk after UBS takeover of Credit Suisse; FTSE 100’s biggest rally of 2023 – as it happened

Credit Suisse UBS FT United States Colm Kelleher
The Credit Suisse logo is seen at their offices at the Canary Wharf financial district in London.
The Credit Suisse logo is seen at their offices at the Canary Wharf financial district in London. Photograph: Reinhard Krause/Reuters

Closing summary

Time to wrap up…. here are today’s main stories so far:

We’ll be back tomorrow for the latest in the banking crisis, February’s UK inflation report, and an eagerly awaited Federal Reserve decision on US interest rates….

Hunt’s pensions tax break expected to help ‘nearly as many bankers as doctors’

Jeremy Hunt’s pensions tax break for the highest 1% of savers in Britain stands to benefit almost as many bankers as doctors, an economist has said, as the government insisted the budget giveaway was designed to cut NHS waiting lists.

On a day of renewed pressure over the £1bn giveaway, Rishi Sunak argued that scrapping the tax-free lifetime allowance on pensions would encourage more doctors to stay in employment rather than taking retirement.

However, the government has been warned that abolishing the almost £1.1m limit could have a minimal impact on boosting employment, while Labour has promised to reverse the measure.

Torsten Bell, the chief executive of the Resolution Foundation, said official figures suggested that about 20% of the savers likely to benefit from the change worked in the finance industry.

Bell said:

“It is, yes, lots of doctors – so about a quarter of them are doctors or other senior high-paid medical staff. Twenty per cent, though, work in the financial services sectors. So nearly as many bankers as doctors.”

FTSE 100 posts best daily gain since November

In the City… the FTSE 100 index has racked up its best day since early last November.

The blue-chip index has closed 132 points higher at 7536 points, a gain of 1.79% – the highest percentage rise and points gain in four months.

The market was lifted by a recovery in bank stocks, with the Credit Suisse takeover agreed and the US hinting at more protection for American bank deposits.

Oil also picked up after a bad day on Monday, as fears that a banking crisis might trigger recession eased.

Michael Hewson of CMC Markets sums up the day:

We’ve seen a broad-based rebound in European markets today with the FTSE100 back above 7,500 driven by a recovery in banks and energy. We’re also seeing decent gains for European banks, led by UBS, UniCredit, Commerzbank and Deutsche Bank.

Today’s rebound in the banks appears to suggest we may have found a short-term base, as confidence slowly returns after the volatility of the last few days and yields rebound, after the big losses from last week. Amongst the best performers we’re seeing strong gains from the likes of NatWest Group, Barclays, and Lloyds Banking Group.

A rebound in oil prices is also helping to drive gains in BP and Shell, as fears over a banking crisis ease.

Rolls-Royce shares are higher on reports it has signed a memorandum of understanding with Finland’s Fortum to explore opportunities to deploy small modular nuclear reactors in Finland and Sweden.

JD Sports shares are higher on a positive read across from Foot Locker’s numbers after the close in the US last night.

Switzerland’s finance department has issued an order to Credit Suisse to temporarily suspend certain forms of variable pay (ie bonuses) for the bank’s employees, Reuters reports.

The Swiss Federal Council said in a statement that:

“This measure relates to already granted but deferred remuneration for the financial years up to 2022, for example in the form of share awards,”

The government said that deferred payments that were already in the process of being paid out were exempt from the order.

The Swiss government also instructed its finance department to propose further measures on variable remuneration for Credit Suisse.

Over in parliament, UK chancellor Jeremy Hunt has warned that UK inflation over 10% is ‘dangerously high’ (it may fall into single-digit territory tomorrow morning).

Hunt also told the House of Lords economic affairs committee that the root cause of difficulties in the banking sector was probably the speed of global interest rate rises.

Those rate increases have pushed down the value of bonds held by banks, such as Silicon Valley Bank, as explained here.

UBS wants to cherry pick top dealmakers from Credit Suisse’s investment bank instead of supporting the plan to build a new independent firm, Bloomberg reports.

They say:

UBS executives have told their Credit Suisse counterparts that they prefer selectively bolstering their own investment bank while dumping the riskier operations, the people said, asking for anonymity because the review has just begun and no final decisions have been made.

Full story: Thousands of UK jobs at risk after UBS takeover of Credit Suisse

The fate of thousands of jobs in London’s financial district is in doubt after the emergency merger of Swiss banks UBS and Credit Suisse, my colleague Anna Isaac reports.

The two lenders are yet to spell out in detail what their rushed union may mean for the more than 5,000 Credit Suisse and about 6,000 UBS staff based in London.

The Swiss government forced through a takeover of Credit Suisse by its rival UBS on Sunday for almost $3.25bn (£2.65bn) – well below its market value at the time – amid fears its collapse could trigger a banking crisis.

Sources at Credit Suisse told the Guardian they expected investment banking roles to be the worst-hit group among those based in London, and as many as 20% of workers would be lost across other business areas.

“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 said.

Insiders added that it was too soon to provide any certainty on the total number of workers who may lose their jobs. Some staff within the bank’s wealth and asset management arms had been offered retention payments by UBS, amid cross-sector competition for high performers, sources said.

Credit Suisse and UBS declined to comment on plans to cut or reconfigure the new joint workforce.

More here:

Both the US dollar and the pound have slipped today, as traders wonder if central banks are close to ending their interest rate hikes.

Against a basket of currencies, the dollar is down 0.25% today, ahead of tomorrow’s interest rate decision from the Federal Reserve.

The pound, though, has lost half a cent against the dollar to $1.222. Against the euro, sterling has lost 1% to €1.134.

The Fed is expected to raise US interest rates by a quarter-point on Wednesday.

Thursday’s Bank of England decision could be harder to call, with the money markets split fairly evenly between a quarter-point rise, and no change.

Legal & General chief executive Nigel Wilson has said the recent turmoil in the banking industry was unfortunate.

During an online briefing with the media, Wilson – who is stepping down this year – also said he was worried lending will go down, saying:

“It’s unfortunate what’s happening in the banking industry,”.

Earlier this month, Wilson warned that the UK was a low productivity economy, hampered by sluggish growth, high regulation and low wages.

Updated

US Treasury secretary Janet Yellen is speaking to the American Bankers Association’s conference in Washington.

As flagged earlier, she has suggested that depositors at smaller US banks could be offered more protection, if there were to be further bank runs.

Yellen explained that the US banking system is sound, despite recent pressures, and pledged to stay vigilent in the days and weeks to come.

She described the US financial system as the safest and most liquid in the world.

And she said the US government was ready and prepared to take the steps necessary to ensure that bank desposits, and the banking system, are safe.

Yellen also urged Congress to raiased the US debt ceiling, saying this should be done without conditions.

It is vitally important, she added, to put the US on a sustainable fiscal path.

Claire Williams of American Banker has more details:

Updated

US home sales up 14.5% in February

US home sales have jumped by much more than expected last month, as the spring selling season got underway.

Sales of previously owned homes rose 14.5% in February compared with January, according to a seasonally adjusted count by the National Association of Realtors. That lifted sales to an annualised rate of 4.58 million units.

It was the first monthly gain in 12 months and the largest increase since July 2020 (just after the start of the Covid-19 pandemic), points out CNBC.

An easing in mortgage rates around the turn of the year may have helped buyers.

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said Lawrence Yun, chief economist for the Realtors, adding:

“Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

Average prices dipped, though. The median price of an existing home sold in February was $363,000, a 0.2% drop compared with February 2022.

Rating agency Fitch has put Credit Suisse on Rating Watch Evolving (RWE), a sign that it would either raise or lower the bank’s credit rating following its takeover by UBS.

Fitch says is it likely to upgrade Credit Suisse if the bank’s merger with UBS proceeds as planned, “because the resulting business combination will likely result in improvements to Credit Suisse’s franchise and business model, risk management and funding and liquidity profiles.”

But should the transition fail, there is "the risk of a downgrade”, Fitch adds (not implausible, given UBS is basically rescuing Credit Suisse…).

Fitch says:

The RWE reflects Fitch’s view that the planned acquisition by UBS should strengthen the group’s business profile, and the risk of a further weakening if the transaction does not go ahead.

Over in Canada, inflation has slowed by more than expected.

Consumer prices across Canada rose by 5.2% per year in February, down from 5.9% in January.

That’s the largest deceleration in the headline CPI since April 2020.

Statistics Canada cautions, though, that prices remain elevated, although inflation has slowed in recent months.

Compared with 18 months ago, for example, inflation has increased 8.3%.

UK inflation data is due tomorrow morning, and expected to show a slowdown too – perhaps from 10.1% per year to 9.9%.

UK banks are pushing the FTSE 100 higher in London.

The blue-chip index is now up 145 points, or almost 2%, at 7547 points, with NatWest up 7% and Barclays gaining 5.7%.

Wall Street has followed Europe’s lead, rallying in early trading.

  • Dow Jones industrial average: up 292 points or 0.9% at 32,536

  • S&P 500: up 40 points or 1% at 3,992 points

  • Nasdaq Composite: up 114 points or 1% at 11,789

Major Wall Street banks, like their smaller counterparts, are leading the rally. JP Morgan and Goldman Sachs are both up 2.8%, leading the Dow risers.

Regional US bank shares rally

Ding ding ding goes the Wall Street opening bell…. and up up up go share in US regional banks.

First Republic is trying hard to stage a recovery, they’re up 30% at the start of trading, a day after tumbling 47%.

This follows reports that JP Morgan CEO Jamie Dimon is working on a new rescue proposal for the San Francisco-based bank.

The possibility that the US government might extend guarantees on bank deposits are helping other regional banks too.

PacWest Bancorp, based in Los Angeles, has jumped 10%.

As covered at 11.26am GMT, US Treasury secretary Janet Yellen is expected to tell American bankers today that the US government could provide more backing for deposits at smaller American banks if needed.

New York Community Bancorp has gained 6%, after an upgrade by DA Davidson.

Zions, of Salt Lake City, are also up 6%.

Wall Street is set to open higher in around 15 minutes, as anxiety over the banking crisis eases.

Regional bank stocks are expected to jump, after today’s reports that Janet Yellen will signal further US government backing for deposits at smaller American banks if needed (see earlier post)..

Updated

Just Eat Takeaway has confirmed that it laying off 1,700 couriers, as part of a reorganisation.

Europe’s largest food online ordering and delivery service is ending a service by which it employs its own couriers in several UK cities. Another 170 people in the company’s operational department will also be impacted.

Just Eat said it will retain the employed courier model in most parts of continental Europe.

Just Eat Takeaway is reportedly laying off as many as 1,700 delivery drivers as the takeaway company grapples with a post-pandemic slowdown.

The Daily Telegraph has the details:

Bosses are understood to have informed impacted workers on Tuesday morning, with delivery drivers being offered six weeks’ notice with pay. The shake-up will also affect 170 full time Just Eat staff within its operations team.

The £3.5bn food delivery company, which is listed in London and Amsterdam, has been seeking to slash spending as takeaway order numbers plunge post-pandemic and families grapple with the cost-of-living crisis.

Total customer numbers fell by 9pc in 2022, the company said at its annual results earlier this month, while rising inflation means diners are spending about 3pc more on an average order.

More here.

FTSE 100 up 1.5%, best rally of the year

After an upbeat morning, the London stock market is on track for its best day this year.

The FTSE 100 index of blue-chip shares is now up 121 points, or 1.6%, at 7524 points, as calm returns to the markets folloowing the takeover of Credit Suisse.

That would be the biggest one-day rise since 21st December last year, and lifts the index to its highest since last Wednesday (when fears over the crisis at Credit Suisse rocked global markets).

Engineering firm Rolls-Royce are the top riser, up 5.9%, followed by banks NatWest +5.6%) and Barclays (+4.7%).

Standard Chartered bank (+4.4%), and Lloyds Banking Group (+3.9%) are also lifting the market.

Bank shares nudged higher after Janet Yellen signalled that there could be more support for US bank deposits (see earlier post).

There is “broad relief” in the City today, reports Neil Wilson, chief markets analyst at Markets.com.

Wilson adds:

There’s a sense that we got through the hardest part with Monday’s volatility dialling down. Shares in London, Paris and Frankfurt rallied more than 1% again in early trading on Tuesday.

But, despite the apparent relief, ”uncertainty is still in charge” as investors ponder what the US Federal Reserve and the Bank of England will decide to do at their interest rate decisions this week.

Wilson says:

What we are seeing is that once events take over, policymakers are left with zero good options.

Updated

Janet Yellen to signal further US support for deposits at smaller banks, if needed

US Treasury secretary Janet Yellen is expected to tell American bankers today that the US government could provide more backing for deposits at smaller American banks if needed.

Yellen is due to speak to an American Bankers Association conference. Excerpts of her prepared remarks show that she will say that the US banking system is stabilizing after “decisive and forceful” actions from regulators.

Earlier this month, US regulators guaranteed all deposits at failed banks Silicon Valley and Signature, above the industry-wide maximum of $250,000.

Yellen is expected to indicate that fresh action to protect bank depositors could be warranted if smaller institutions suffer deposit runs that threaten more contagion.

Remarks released by the US Treasury show that Yellen will say:

“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system.

And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”

Some banking groups have called for temporary universal guarantees on all US bank deposits, a step that requires approval by Congress under expedited procedures.

But, some Republican lawmakers oppose blanket deposit guarantees, warning that universal guarantees on all bank deposits would encourages future irresponsible behaviour.

Credit Suisse staff have experienced a mix of anger, surprise, tears and resignation over the takeover by UBS last weekend, Financial News report.

One investment banker contacted by Financial News said:

“I’ve cried twice in my career. One during my first week in investment banking when I thought ‘what the hell have I let myself into’, and once today.”

“Everyone is stunned by the speed of the downfall,” said another senior investment banker, adding:

“We are grasping for details — we know they are going to scale back, but we don’t know by how much.”

A third reports spending 60% of their time on work, and 40% doing their CV and reaching out to recruiters…..

More here: ‘It’s game over’: Anger and tears from shocked Credit Suisse staff after historic UBS takeover

Updated

Billionaire hedge fund manager Bill Ackman argues that the turmoil in the banking sector should encourage US central bankers to resist raising interest rates this week.

The Federal Reserve is due to set US interest rates tomorrow (6pm UK time), and economists had been expecting a quarter-point increase as it tries to cool inflation.

Ackman, though, argued overnight that the Federal Reserve should not put additional pressure on the system, as “financial stability is the Fed’s first responsibility”.

Ackman also cites the surprise decision to wipe out Credit Suisse’s AT1 bond holders, while paying 3bn Swiss francs to Credit Suisse’s shareholders, saying:

The Federal Reserve should pause on Wednesday.

We have had a number of major shocks to the system. Three US bank closures in a week wiping out equity and bond holders. The demise of Credit Suisse and the zeroing of its junior bondholders. Notably, bondholders bearing losses is a new phenomenon as they were protected in the GFC.

Investor morale in Germany has fallen this month, and by more than expected, the ZEW economic research institute has reported.

The institute’s economic sentiment index decreased to 13.0 from 28.1 in February. Economists had expected a smaller decline, to 17.1.

Concerns over the banking sector, and the financial markets, hit confidence this month.

ZEW president professor Achim Wambach explains:

“The international financial markets are under a lot of pressure. This currently high level of uncertainty is also reflected in the ZEW economic expectations.

The assessment of the banks’ earnings development has deteriorated considerably, but remains slightly positive. The assessments of the insurance industry are also declining significantly.”

Updated

Key event

The price of riskier bonds issued by European banks have strengthened this morning, as markets regain some confidence following the takeover of Credit Suisse.

AT1 bonds, which are designed to convert into equity in a crisis or be wiped out, are rallying. One, from UniCredit, has gained more than 3 cents, while others issued by Deutsche Bank and UBS have risen more than 2 cents, Reuters reports.

However, the gains only partially offset the hefty losses of 5 cents or more suffered on Monday.

European and UK regulators effectively rebuked the Swiss authoritires yesterday, for deciding to wipe out Credit Suisse’s AT1 bonds while preserving some value for shareholders. In the UK and Europe, they said, equity will still be first in the firing line before AT1 bonds.

Some holders of Credit Suisse AT1 bond-holders are considering legal action, over the decision to break the usual heirachy.

But in Switzerland, the bonds’ terms state that in a restructuring, the financial watchdog is under no obligation to adhere to the traditional capital structure.

Derby named new HQ of Britain’s rail network

As our transport correspondent Gwyn Topham exclusively reported yesterday, Derby has just been named as the new headquarters of Britain’s railways.

Derby was on a shortlist of six locations to become the official home of Great British Railways, alongside Birmingham, Crewe, Doncaster, Newcastle and York.

This is a big symbolic boost to Derby, although the new strategic body’s HQ will house a limited number of direct top-level railway jobs.

As Gwyn wrote yesterday:

Contenders to host GBR have had to demonstrate their railway heritage and also how the move could contribute to the government’s levelling up agenda.

Mark Harper, the UK’s transport minister, says Derby will become “the heart of Great Britain’s rail industry”.

Harper explains:

Among an exceptional list of shortlisted applicants, Derby scored highest in the Expression of Interest stage of the competition, which analysed its suitability against six published criteria: levelling up, connectivity, opportunities for GBR, value for money, heritage and public support.

It also scored highest in the six-week public vote, attracting 45,600 votes, more than 5,000 ahead of the second placed location in a total vote of 205,000.

First Republic shares up 20% in pre-market trading

Elsewhere in the banking sector, shares in troubled US lender First Republic Bank are up 20% in pre-market trading in New York, on hopes of a rescue deal.

Yesterday, First Republic’s shares tumbled by 47% amid reports that the San Francisco-based bank may need to raise more funds despite a $30bn (£24bn) rescue last week.

S&P Global cut its credit rating deeper into junk territory, adding to the pressure on First Republic.

But….JP Morgan boss Jamie Dimon was leading efforts to craft a rescue deal for First Republic last night.

Dimon, a veteran of previous banking rescues (Bear Stearns and Washington Mutual in 2008), held talks with the chief executives of other major banks about how to shore up First Republic’s finances.

The Wall Street Journal explains:

The discussions, while preliminary, have focused on how the industry could arrange for an investment that would boost the bank’s capital, according to people familiar with the matter.

Among the options on the table, the people said, is an investment in First Republic by the banks themselves.

Updated

The gold price has dipped this morning, a day after hitting $2,000 per ounce for the first time in a year amid Monday’s nervous tradng.

Gold has slipped back to $1,967 per ounce, down 0.6% today.

UK government borrowing rose last month to the highest February deficit on record, largely because of spending on support schemes to help households and businesses with spiralling energy bills.

The government borrowed £16.7bn in February, £9.7bn more than a year earlier and the highest February borrowing since monthly records began 30 years ago, according to the latest figures from the Office for National Statistics.

The government borrowed more despite higher tax receipts and lower debt interest payments. Cumulative borrowing for the full year to the end of March is on track to undershoot official forecasts.

Economists said this could raise the chancellor’s hopes of being able to announce a pre-election giveaway later this year – but also warned that the turmoil in the banking sector could deepen the economic downturn.

February’s borrowing lifted the UK’s national debt to its highest level since the 1960s, as a share of the economy:

Here’s the full story:

Stock market volatility has dropped today, with the Euro Stoxx Volatility Index down 2.2 points to 26.2.

Market are putting on a show of increasing calm, says the strategy team at Danish investment bank Saxo.

But, they caution, the implications of the rescues of Credit Suisse and of Silicon Valley Bank this month won’t fade fast:

We can hardly expect that the implications of what has unfolded are set to quickly fade after two dramatic weekend interventions to avoid banks triggering a systemic crisis.

The FTSE 100 index is continuing to climb in London.

It’s now up 96 points, or 1.3%, with NatWest and Barclays both up 5% and Lloyds Banking Group. up 4.3%.

The smaller FTSE 250 index, of medium-sized companies, has gained 1.4%.

Crisis fears have eased, for now, says Steve Clayton, head of equity funds at Hargreaves Lansdown:

“Markets took a breather from fretting about banking contagion overnight. Wall Street saw modest rallies across leading industrial, financial and technology sectors as investors dissected the detail of the rescue of Credit Suisse by longstanding rival, UBS. The deal has combined Switzerland’s two leading banks, both of them leading players in the international investment banking arena. Both, of course, are also substantial private bankers handling the affairs of rich families worldwide.

Initially sceptical of the deal, the market’s mood changed over the course of yesterday, with UBS shares ending higher after a sharp initial fall.

Updated

European bank stocks are on track for their biggest one-day gain in five months.

The Stoxx 600 banks index, which tracks bank shares across the region, is up 3% so far this morning, which would be the best day since last October.

Updated

The marriage between UBS and Credit Suisse leaves “much uncertainty and nervousness among employees” who are unsure whether they will be let go, says Victoria Scholar, head of investment at interactive investor.

Up to a third of the 120,000 jobs in the combined UBS / Credit Suisse group could be let go. According to the Financial Times, tens of thousands of staff could be cut with Credit Suisse employees most at risk. A major restructuring and cost cutting programme was already underway at the embattled lender before the Swiss authorities arranged the rescue deal with 9,000 jobs cuts planned as well as a major scale back of its investment bank.

Southeast Asia could be the region most at risk to job cuts given that it has the biggest overlap in terms of investment banking and wealth management teams.

Meanwhile legal action is being considered against Credit Suisse after its $17 billion worth of AT1 bonds were written down to zero, Scholar adds:

PIMCO reported lost about $340 million on its Credit Suisse AT1 bonds according to Reuters. One analyst at Goldman Sachs said there is concern about ‘permanent destruction in demand’ in the CoCo bond market. Bondholders typically rank above shareholders in the repayment pecking order when a company fails yet in Credit Suisse’s case its convertible bondholders have seen their investments wiped out.

Much uncertainty remains around the future of the Swiss banking group with the potential for litigation, job cuts, restructuring and outflows. The first step must be to shore up confidence and convince shareholders of potential synergies from the combined group.

Although UBS shares initially reacted negatively on Monday, the stock regained ground and the mood music has brightened across stock markets today as investors ruminate over the fact that a full-blown collapse of Credit Suisse and another Lehman moment has at least been prevented in Switzerland, stemming broader banking contagion and a domino effect on the Swiss economy.”

Updated

Moody’s credit rating agency downgrades outlook for UBS to negative

Rating agency Moody’s has cut the outlook on UBS Group’s [UBSG] debt to negative following its takeover of Credit Suisse.

Moody’s has affirmed UBS’s current credit ratings, but lowered the outlooks on its long term deposit and senior unsecured ratings to negative from stable.

A negative outlook is an indication that a rating may be lowered in future.

The rating agency says it took this decision following UBS’s deal to buy Credit Suisse for 3bn Swiss francs:

The action balances on the one hand the advantageous financial terms in terms of liquidity and capital together with the long-term potential for franchise enhancement, and on the other hand the complexity, extent and duration of the integration.

Moody’s points out that UBS faces “significant financial, cultural and franchise related” challenges as it tries to integrate Credit Suisse into its business.

They include:

The need to retain key CSG personnel while the transaction is underway; the need to minimize the loss of overlapping clients in its Swiss banking and wealth management businesses; and the need to unify the cultures of two somewhat different organizations while ensuring that overall risk appetite and controls are both enhanced and or maintained at levels defined by UBSG.

Shares in UBS opened 3% higher in Zurich, as investors continue to digest its takeover of Credit Suisse (whose shares were slightly higher in early trading).

Shares in two of Germany’s largest banks, Deutsche Bank and Commerzbank, are both up around 3% in early trading.

Shares open higher in London

Shares have opened higher in London, and across Europe, as calm returns to the markets after some rather choppy sessions.

The FTSE 100 index of blue-chip shares has jumped by 58 points, up 0.8%, to 7460.

Barclays is leading the way, up 2.5%, with NatWest (+2.2%) and Lloyds Banking Group (+2.2%) also in the top risers.

Michael Hewson, chief market analyst at CMC Markets UK, cautions that:

Sentiment is likely to remain fragile over the next few days until we see the outcome of tomorrow’s Fed meeting, and their take on recent events, while on Thursday we get the latest central bank decisions from the Swiss National Bank and the Bank of England.

Introduction: Jobs at risk after UBS takeover of Credit Suisse

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

As the dust settles following the emergency rescue of Credit Suisse by UBS, fears of heavy job losses are growing.

The shotgun wedding hammered out between the two Swiss banks last weekend will create a 120,000-strong financial institution – and it already seems inevitable that the workforce will shrink.

Switzerland’s financial sector already anticipating a heavy hit from the contentious takeover, with the Swiss Bank Employees Association warning yesterday that “the jobs of very many employees are at stake.”

Credit Suisse’s domestic business and its investment bank, which collectively employ more than 30,000 staff, are expected to bear the brunt of the cuts, the Financial Times reports this morning.

According to people familiar with UBS’s plans, as much as a third of the 120,000 jobs in the combined group could be at risk, as UBS winds down much of the investment bank and removes overlapping roles in Switzerland.

The FT explains:

Credit Suisse, which at the end of 2022 employed just over 50,000 people, was already in the middle of a wide-ranging job-cutting drive, with 4,000 positions slashed so far this year.

But the takeover is expected to result in many of Credit Suisse’s 17,000 investment bankers losing their jobs as UBS winds down most of the unit.

On Sunday night, UBS chairman Colm Kelleher explained that he plans to run down the investment banking part of Credit Suisse. UBS itself operates an investment bank-lite model, more focused on asset management which is less risky.

Kelleher (who apparently squeezed in a beer at Zurich’s James Joyce pub during the weekend negotiations to rescue Credit Suisse), told reporters on Sunday evening that it was “just too early to say” what would happen about job cuts, adding:

“We will be considerate employers, but we need to do this in a rational way, thoughtfully, and when we’ve sat down and analysed what we need to do.”

The former chief executive of UBS in the UK, Mark Yallop, said he thinks job losses will be “inevitable”. He told Radio 4’s Today programme on Monday they will probably be concentrated in Credit Suisses’ investment banking business, and in in middle-office, technology and operational roles.

Some Credit Suisse bankers aren’t planning to hang around and see the axe fall, though.

Headhunters and rival lenders from Singapore to London to New York have been fielding calls over the past few days from anxious Credit Suisse staff, Bloomberg say, adding:

One firm in Singapore handled questions from some 30 mostly Credit Suisse private bankers about available jobs on Monday, while another recruiter in Hong Kong has been talking to more than 20 senior investment bankers since last week, the people said, asking not to be identified discussing confidential information.

Meanwhile, a firm that’s focused on managing director hires said it has received such calls since late Friday, especially for the wealth area.

Financial markets appear calmer today, after a volatile session on Monday. Europe’s main stock market indexes are expected to rise this morning.

Investors were initially panicked yesterday that some Credit Suisse bond holders were being wiped out while shareholders would receive a payment, inverting the usual order of business.

But UK and European officials calmed the markets, by insisting they would stick to the usual heirachy.

The agenda

  • 7am GMT: UK public finances for February

  • 9.45am GMT: Treasury Committee gathers economist views on Spring Budget

  • 10am GMT: ZEW index of German economic sentiment

  • 2pm GMT: US existing home sales

Updated

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