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.
As concerns over the scale of job losses have mounted following a state rescue of the bank worth billions of dollars, the Swiss authorities stepped in to put curbs on some bonus payments.
The government announcement on Tuesday came after a backlash over reports that some bonuses were set to be distributed, despite the merger requiring taxpayer backing to proceed, with the state providing 260bn Swiss francs (£230bn) of funding and guarantees.
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.
Now workers face the prospect of losing their roles and also, in some cases, losing bonuses. In a statement the government said the Swiss finance ministry “is temporarily suspending already granted but deferred variable remuneration for the financial years up to 2022 by means of an order to Credit Suisse”. It added: “The only exceptions are deferred payments that are already in the process of being paid out.”
A deferred bonus can include payments in shares promised to employees at a point in time but to be delivered at a future date in order to encourage them to stay with a bank or company, as well as other forms of compensation.
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.
In a signal that jobs and other costs could be slashed across the board, UBS said in its press release confirming the merger that the tie-up would save the enlarged bank $8bn in running costs by 2027.
That statement contrasted with the one issued by Credit Suisse, which said: “UBS has expressed its confidence that the employment of the staff of Credit Suisse will be continued.”
Fresh job losses could compound the impact on the City from Brexit on its business with the EU. The split from Brussels left the City effectively in a no-deal scenario, with no trade pact with the bloc which comprehensively covers the UK’s financial and professional services.
This is despite the UK’s competitive advantages being strongly tied to services, which account for more than 80% of economic output.
Many star performers from Credit Suisse had already left the scandal-hit bank in the past 12 months, one recruitment agency said on condition of anonymity, offering examples of staff placed in new roles over that time period.
Those leaving may face a challenging jobs market in the financial sector as fears rise of economic uncertainty and institutions grapple to reshape their strategies amid higher interest rates and higher operating costs because of inflation.
The number of finance jobs available in London had already slowed by 8% in the three months to December last year, according to data gathered by the recruitment firm Morgan McKinley.
The Swiss bank employee association warned on Monday that “the jobs of very many employees are at stake”.
SBPV on Tuesday called for job losses to be put on hold until 2023 and said it was working on a support plan for staff with Credit Suisse, UBS and the Swiss federal government.
SBPV added in a statement that employees should be prioritised given the state assistance the merger had received.
Credit Suisse’s London staff are housed in 1 Cabot Square, a high rise built in the 1980s which had a £1m multi-year refurbishment completed in 2019. It is unclear if that presence in Canary Wharf would be retained alongside UBS UK’s head office in Broadgate, within the City.
Last year, UBS sublet two floors of its 12-storey building which overlooks Liverpool Street station. Its lease on the building runs until 2035.
However, property company data, including from Savills, suggested that demand for London’s office space had picked up a little in the year to March.
