Banking crisis: Thousands of City jobs at risk with UBS set to ‘downsize’ Credit Suisse investment bank division

Thousands of jobs in the City are at risk after UBS’s dramatic acquisition of Credit Suisse last night, with Credit Suisse’s investment banking division at the heart of discussions.

The Swiss banking stalwarts employ some 11,000 people in London, including a high concentration of their investment banking units which were already facing potentially hefty job cuts in the coming months.

Former chief of UBS UK, Mark Yallop, said on Radio 4 this morning it was “inevitable that a merger of this sort will result in some further job losses” and jobs in their investment banking units may be the first to go.

“I would imagine those would be concentrated in the risky investment banking business at Credit Suisse which is partly the cause of the problems that the firm is experiencing,” Yallop added.

Credit Suisse and UBS declined to comment on the scale of potential job cuts when approached by City A.M. this morning. 

An internal memo seen by the Financial Times confirmed a potential slew of job cuts could be on the way following the merger.

“We (will) work diligently and at pace throughout the coming period to identify which roles might be impacted,” Credit Suisse bosses told staff in an email.

A large proportion of the bank’s London-based employees are in its investment banking division which was already set to be spun off as CS First Boston as part of turnaround efforts under chief Ulrich Korner. The plans have been thrown into doubt by the UBS deal, however.

Announcing the deal yesterday, UBS chair Colm Kelleher said “UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture”

UBS wants to focus on wealth and asset management, particularly in the US. Taking on Credit Suisse’s investment banking arm will increase its exposure to risk.

Alison Williams, analyst at Bloomberg Intelligence, said it was unlikely that UBS would wind down the entirety of Credit Suisse’s investment banking operation, however.

“UBS highlighted that the deal helps to accelerate strategic goals in global banking and research, which signals to us that the bank is looking to integrate at least some of Credit Suisse’s investment banking unit,” she said.  

“Specifically, the bank highlighted an expanded US footprint and enhanced M&A capabilities in high growth sectors,” Williams continued. 

Analysts at Jefferies said today that UBS chiefs were set to be weighing up the outcomes of the deal for “many quarters, maybe years.”