Hastily arranged marriage of UBS-Credit Suisse could lead to loss of up to 36,000 jobs: Report

The hastily arranged alliance of Credit Suisse and UBS could trigger a loss of 36,000 jobs across the world, according to German media. The management brought in to wade through the stormy waters of the merger may be looking to cut between 20 per cent to 30 per cent of the workforce, meaning somewhere between 25,000 to 36,000 could end up losing their jobs, reported SonntagsZeitung. 

UBS and Credit Suisse employ 72,000 and 50,000 people worldwide respectively. Switzerland, the base of Credit Suisse may alone see a cut of 11,000 jobs. Meanwhile, jobs in the US could also be at severe risk, the publication stated.  

The release of the report comes in the same week when UBS announced it was bringing its former chief executive Sergio Ermotti to handle the absorption of troubled rival Credit Suisse. 

Apart from thousands losing their jobs, the investors have also lost billions. Reportedly, over $17.3 billion worth of bonds issued by Credit Suisse bank has become worthless after UBS came in with the takeover bid. 

Under the takeover deal, UBS will be writing down the bank’s additional tier 1 (AT1) bonds to increase core capital.

“The extraordinary government support will trigger a complete write-down of the nominal value of all AT1 shares of Credit Suisse in the amount of around 16 billion [Swiss francs],” said Swiss regulator FINMA.

The AT1 bonds were primarily created for the failing banks to absorb losses, thereby reducing the chances of a taxpayer-funded bailout. Because of the higher risks, the AT1 bonds provided a greater yield than most other bonds and they became a quick favourite of institutional investors.

After reports came in that Credit Suisse had collapsed, the Swiss government stepped up and arranged a takeover by the UBS Group for $3.25 billion. The takeover was aimed at preventing economic turmoil from spreading throughout the country and beyond. 

(With inputs from agencies)

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