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UBS Group (UBS) Eliminates Top Credit Suisse Bankers Post Buyout
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As UBS Group AG (UBS - Free Report) starts the integration of the Credit Suisse business into its own post acquisition, the company has reportedly let go of numerous senior Credit Suisse executives.
Separately, UBS chief executive, Sergio Ermotti, said that 10% of Credit Suisse’s workforce had left in recent months.
While the post-merger integration process is expected to take up to three-five years, the bank is not done with staffing reductions. It is expected to cut additional jobs in the coming weeks, likely in Credit Suisse’s investment bank (IB) and its domestic business.
Beside this, it was earlier reported that UBS would likely impose tight restrictions on Credit Suisse staff, including a ban on launching complex financial products and acquiring clients from certain high-risk countries.
The company had projected a negative impact of $13 billion on its shareholders’ equity from fair value adjustments of the combined group's financial assets and liabilities. It also estimated booking a one-time gain for negative goodwill of $34.8 billion.
In March, UBS announced an all-share deal to acquire its troubled rival Credit Suisse in government-backed efforts to fend off panic in the global banking system. At the deal announcement, the acquisition was expected to generate an annual run-rate of cost reductions of more than $8 billion by 2027. UBS Group also expected the transaction to be accretive to EPS by 2027.
The historic deal was closed after signing the Loss Protection Agreement with the Swiss government on Jun 9, 2023. Per the agreement, UBS will bear the first CHF 5 billion of the realized losses from non-core assets acquired. Further, the agreement provides for a government guarantee, covering realized losses up to CHF 9 billion over and above the loss borne by UBS.
UBS Group’s shares have gained 10.2% on the NYSE over the past six months compared with the industry’s growth of 9.1%.
Amid unfavorable macroeconomic conditions and cost pressures, many other Wall Street firms, including Bank of America (BAC - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) , have been resorting to staffing rationalization.
Last month, it was reported that Bank of America intended to eliminate 40 positions in its Asia region’s IB unit. Of the affected employees, the majority are based in Hong Kong, with a particular emphasis on China, and hold junior positions, per people familiar with the matter. BAC’s latest redeployment strategy aims to serve as a temporary measure in response to the dealmaking scarcity and slowdown in China’s economy.
Goldman Sachsis considering another round of job cuts in the upcoming weeks, per people familiar with the matter. In its latest round of layoff, GS is likely to cut fewer than 250 jobs across seniority levels, and include partners and managing directors. This comes after Goldman trimmed its headcount by about 3,200 in the first quarter in its biggest round of layoffs since the 2008 financial crisis. Last year, the company cut about 500 jobs.
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UBS Group (UBS) Eliminates Top Credit Suisse Bankers Post Buyout
As UBS Group AG (UBS - Free Report) starts the integration of the Credit Suisse business into its own post acquisition, the company has reportedly let go of numerous senior Credit Suisse executives.
Separately, UBS chief executive, Sergio Ermotti, said that 10% of Credit Suisse’s workforce had left in recent months.
While the post-merger integration process is expected to take up to three-five years, the bank is not done with staffing reductions. It is expected to cut additional jobs in the coming weeks, likely in Credit Suisse’s investment bank (IB) and its domestic business.
Beside this, it was earlier reported that UBS would likely impose tight restrictions on Credit Suisse staff, including a ban on launching complex financial products and acquiring clients from certain high-risk countries.
The company had projected a negative impact of $13 billion on its shareholders’ equity from fair value adjustments of the combined group's financial assets and liabilities. It also estimated booking a one-time gain for negative goodwill of $34.8 billion.
In March, UBS announced an all-share deal to acquire its troubled rival Credit Suisse in government-backed efforts to fend off panic in the global banking system. At the deal announcement, the acquisition was expected to generate an annual run-rate of cost reductions of more than $8 billion by 2027. UBS Group also expected the transaction to be accretive to EPS by 2027.
The historic deal was closed after signing the Loss Protection Agreement with the Swiss government on Jun 9, 2023. Per the agreement, UBS will bear the first CHF 5 billion of the realized losses from non-core assets acquired. Further, the agreement provides for a government guarantee, covering realized losses up to CHF 9 billion over and above the loss borne by UBS.
UBS Group’s shares have gained 10.2% on the NYSE over the past six months compared with the industry’s growth of 9.1%.
Image Source: Zacks Investment Research
UBS carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amid unfavorable macroeconomic conditions and cost pressures, many other Wall Street firms, including Bank of America (BAC - Free Report) and The Goldman Sachs Group, Inc. (GS - Free Report) , have been resorting to staffing rationalization.
Last month, it was reported that Bank of America intended to eliminate 40 positions in its Asia region’s IB unit. Of the affected employees, the majority are based in Hong Kong, with a particular emphasis on China, and hold junior positions, per people familiar with the matter. BAC’s latest redeployment strategy aims to serve as a temporary measure in response to the dealmaking scarcity and slowdown in China’s economy.
Goldman Sachsis considering another round of job cuts in the upcoming weeks, per people familiar with the matter. In its latest round of layoff, GS is likely to cut fewer than 250 jobs across seniority levels, and include partners and managing directors. This comes after Goldman trimmed its headcount by about 3,200 in the first quarter in its biggest round of layoffs since the 2008 financial crisis. Last year, the company cut about 500 jobs.