- UBS CEO Sergio Ermotti has warned of necessary job cuts following the takeover of Credit Suisse, citing the need to create a sustainable cost base.
- Despite the takeover, Credit Suisse executives may play significant roles in the merged entity, suggesting a balanced distribution of jobs.
- Ermotti dismissed concerns that the new entity, twice the size of Switzerland’s annual economic output, was too large, stating that in banking, “size matters.”
The anticipated fusion of banking giants, UBS and Credit Suisse, has been met with enthusiasm by market watchers, even as UBS grapples with job complexities.
Sergio Ermotti, UBS Chief Executive, recently addressed these concerns, acknowledging the difficult choices the merger necessitates in terms of job cuts.
The top brass at UBS has been tasked with aligning the two financial powerhouses, an endeavor that signals significant changes in the Swiss banking landscape.
UBS says job cuts, an unavoidable side-effect
Ermotti, in his address at an event hosted by the Asset Management Association Switzerland, underscored the fact that synergies, inevitably, may imply job cuts.
“We can’t instantly generate job opportunities for all,” he remarked, setting the stage for challenging times ahead. The emphasis is on developing a feasible outcome by re-evaluating the cost base of the individual and merged organizations.
Ermotti did not mince words when he indicated that the path ahead “will be painful.”
The prospective UBS-Credit Suisse merger was facilitated by Swiss authorities, with UBS, the larger of the two, at the helm. The aim was to expedite the integration process, a sentiment reiterated by Ermotti, who expressed hope that the deal would be formalized shortly.
“We are closing in on the finish line… with over 170 approvals from regulators,” he said.
Ermotti, who previously led UBS from 2011 to 2020, was reappointed CEO in April to manage this monumental banking deal—the largest since the global financial crisis.
Despite characterizing the deal as a takeover rather than a merger, Ermotti hinted at the possibility of Credit Suisse executives assuming significant roles within the combined organization.
This notion seems contrary to the initial leadership lineup announced last month, which included only one top executive from Credit Suisse, CEO Ulrich Koerner.
“Once the dust settles, our primary focus should be securing the best people for the job—for the benefit of our clients, shareholders, and employees,” Ermotti explained. His assertion seems to imply a more balanced distribution of positions between the two banks in the future.
Not ‘too big’ for Switzerland
The merger will result in a behemoth with a balance sheet of $1.6 trillion, approximately twice the size of Switzerland’s annual economic output. This scale has sparked discussions about the institution’s size posing a risk to the Swiss economy.
The Social Democratic Party of Switzerland has even proposed measures to downsize UBS post-merger, to mitigate the possibility of another costly state-backed rescue.
Ermotti, however, disagrees with this view. “I don’t believe we’re too big for Switzerland,” he commented, stating that in the world of banking, “size matters.”
As the dust begins to settle on this groundbreaking banking deal, all eyes will be on UBS as it navigates the challenge of merging two major financial entities.
While there are concerns about job cuts, there is also optimism about the opportunities that such a merger presents in reshaping the Swiss banking industry.
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