2023-06-12 06:36:32
UBS imposes strict rules on CS employees
UBS has completed the takeover: Credit Suisse gets a new board of directors and its shares disappear. But the biggest changes are for the staff. The overview with the most important points.
UBS, headed by Sergio Ermotti, completed the takeover of Credit Suisse on Monday.
Photo: Michael Buholzer (Keystone)
Early on Monday morning, what is now the only major Swiss bank announced in an open letter that the takeover of Credit Suisse by UBS has been completed. On this historic day, the last signatures are placed on the takeover agreement, and then the mega merger is finally sealed.
This day changes nothing for CS customers. The bank continues to exist for the time being, it is now simply a part of UBS. For the employees, on the other hand, a lot will change. Only when the deal is completed will UBS have full access to all of CS’s business documents. She can officially talk to all Credit Suisse employees and work out any risks that are still dormant at CS.
What will change for CS employees?
Right at the start of the new era, UBS announces the tariff. Like the British «Financial Times» reported that UBS is to impose strict rules on the CS bankers following the takeover.
UBS executives appear to have drawn up a list of nearly two dozen “red lines” that would ban employees from a range of activities from day one of the merger. The newspaper relies on people who are familiar with the measures.
The list includes 11 financial and 12 non-financial risks. Some risks are of an operational nature, for example they relate to the use of office space. Others have a direct impact on Credit Suisse’s operations.
For example, it is forbidden to accept customers from high-risk countries such as Libya, Russia, Sudan or Venezuela. CS people are also prohibited from launching new products without the consent of the UBS managers. They also have to ask their permission if they want to lend more than $60 million backed by assets such as yachts, ships and real estate. Ukrainian politicians and state-owned companies would also be blocked to prevent possible money laundering.
The background is the fears of the UBS management that they are dealing with a bank that was much more willing to take on risky customers and high-risk products. After all, Credit Suisse has had a string of scandals and crises in recent years. UBS boss Sergio Ermotti announced in May that the new bank would be “risk-aware”.
Is the staff finally clear?
No. The question of how many employees will lose their jobs remains open. The job cuts will be “painful,” Ermotti warned. The Sunday newspaper reportedthat 30,000 of the 120,000 jobs at UBS and Credit Suisse are at risk worldwide. At the same time, reports have been circulating in recent weeks that the CS HR department is receiving up to 200 layoffs a week. “It is true that around 10 percent of the workforce has left in recent months – even before the takeover,” bank boss Sergio Ermotti told Swiss television SRF on Monday. This helps to mitigate the social costs somewhat.
The bank staff association also spoke up on Monday. He demands that as many jobs as possible be preserved in Switzerland, that a joint social plan be drawn up for “at least” five years and that all employees be treated equally. As long as the integration process and the specific personnel decisions have not been clarified, a stop to layoffs in Switzerland is being demanded.
The association criticizes the previous communication as insufficient. “The employees have been living in uncertainty regarding their professional future for 85 days,” writes the association in the communiqué.
How is the CS management going?
The former CS chief lawyer Markus Diethelm when he represented UBS in the tax dispute with France.
Photo: EPA
Several prominent CS executives are leaving the bank, an internal memo reveals. The previous chief lawyer Markus Diethelm, the chief financial officer Dixit Joshi and Asia chief Edwin Low have announced their departure. Before joining CS, Diehelm was the chief legal officer at UBS. CS asset manager Francesco De Ferrari will remain. He becomes an advisor to Iqbal Khan, UBS’s wealth manager. The Swiss business of CS will continue to be managed by André Helfenstein.
And where is Axel Lehmann?
Finance Minister Karin Keller-Sutter and former CS Chairman Axel Lehmann.
Photo: Fabrice Coffrini (AFP)
Credit Suisse will now be a subsidiary of UBS. UBS Vice Lukas Gähwiler is to become President of the CS Board of Directors. He worked at both big banks and played an important role in the merger of the two big banks. But one important name is missing from the committee: Axel Lehmann. The CS President has no function in the new megabank. The CS media office confirms Lehmann’s departure.
What do the UBS bosses say?
Meanwhile, UBS boss Ermotti is trying to build a new team spirit. Together with UBS President Colm Kelleher, he appealed to all employees in a message on Monday not to “hold on to old rivalries or allow us to be distracted by integration and external pressure”.
“Today is a big day,” Ermotti is quoted as saying. From now on, we will work together as one company – with a common goal. “We have a lot of work ahead of us and maybe not everything will go smoothly,” continue Ermotti and Kelleher. All employees must be willing to learn from and listen to each other. The range of products and services is now to be expanded, the same applies to the geographical reach.
Will supervisors now tighten the screw at UBS?
In a statement, the financial market supervisory authority Finma welcomes UBS’s thrust of reducing the risks of CS in investment banking as quickly as possible. Finma director Urban Angehrn says: “He creates clarity and stability for the banks involved, their customers and for the Swiss banking center.”
Because UBS is likely to have a larger balance sheet following the merger, it will have to build up larger capital cushions. To do this, it will be given a generous transitional period: since it is currently still unclear how large UBS’s balance sheet will be and what risks it is holding on its books, it will not have to start building up additional capital until the end of 2025. By the beginning of 2030 at the latest, it will then have to hold up the cushions.
Irrespective of the end of CS, systemically important banks in Switzerland will have to hold more liquid funds from 2024. As early as 2022, the Federal Council decided to make changes to the Liquidity Ordinance. Institution-specific surcharges will be introduced for UBS, Raiffeisen, Postfinance and ZKB. In autumn, Finma will tell the banks how high they are.
The background: The end of CS was sealed by the fact that customers withdrew their funds at a rapid pace. The bank no longer had the liquid funds to pay them out. The now four systemically important big banks will therefore soon have to hold more liquid funds in order to better protect themselves from this.
What will happen to the CS share?
CS shares will trade for the last time on Monday. After that, the abbreviation “CSGN” will disappear from the stock exchange. It will then be delisted on Wednesday. In the leading Swiss index SMI, they will be replaced by shares in the logistics company Kuehne and Nagel (Read more here).
The shares will be traded until the close of trading on Monday, which is why the very last price has not yet been determined. In the early morning, the titles were trading at around 82 centimes. As a reminder: the all-time high for CS shares in 2000 was CHF 96.50 – more than a hundred times as much.
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