Thousands of City jobs at risk in Credit Suisse crisis
Investment bank, back office and technology jobs are set to be axed in London after UBS swallowed up Credit Suisse
Thousands of City jobs are at risk in the wake of the £2.5 billion rescue takeover of imploding Credit Suisse by arch rival UBS, analysts warned on Monday.
The emergency deal cobbled together on Sunday was supposed to restore confidence in markets worried about a re-run of the 2008 financial crash.
But markets remained febrile on Monday and banks including Credit Suisse in particular are highly likely to axe jobs.
The fallen Swiss banking giant, which was still saying to staff it will pay promised bonuses despite the crisis, employs 5,000 in the UK at Canary Wharf, while UBS has 6,000 mostly at Broadgate in the City.
City veteran David Buik, of Aquis Exchange, said: “There will be ‘cherry picking’ with CS likely to lose more jobs. I would expect 2,000 jobs in total to go.”
Neil Wilson at markets.com said: “It’s going to be rough. Credit Suisse was always heading for shrinkage anyway. It was just one disaster after another at that bank.”
Mark Yallop, former chief executive of UBS in the UK, told BBC Radio 4’s Today programme: “It’s inevitable that a merger of this sort will result in some further job losses.
“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, and in middle, back office, technology and operational roles.”
Stock markets across Asia tumbled overnight and on Monday morning the FTSE 100 fell before recovering lost ground to be broadly flat shortly after 10am.
Barclays shares dropped 7p to 133p at one point, HSBC lost 17p to 525p and Standard Chartered was down 23p to 610p. Credit Suisse shares crashed 60 per cent early this morning, a reflection of the cut-price deal it had to agree with UBS whose shares also took a hit, down 13 per cent.
As bankers and other staff arrived at Credit Suisse in Cabot Square, Canary Wharf, this morning some said they were fearing the worst on possible job losses.
One junior banker said: “I haven’t been here long, I’m very worried as if there are job cuts it could be the case of last in first out. I’m obviously just starting out and I have noticed how spooked my colleagues are. It’s a bit grim at the moment.”
Another worker, who is in the back office, said: “The takeover is good in that it saves us for now but clearly we are worried about our futures. It’s uncertain times.”
An IT department worker said: “IT is an area that may be affected with the UBS takeover. My friends at other banks are also worried that what is happening here is part of a wider problem.”
Another staff member said: “I’ve worked in the City a long time. I’m no stranger to redundancies. Credit Suisse has been a good employer in my opinion. It’s a sad day.
“With the general banking problems at the moment, it is a worrying time, nowhere near the scale of the 2007 crisis, but if there is contagion and other banks struggle we could be facing another jobs bloodbath.”
The US Federal Reserve, the Bank of England, the European Central Bank, the Swiss National Bank, the Bank of Canada and the Bank of Japan joined forces yesterday in a co-ordinated effort to try to stop the Credit Suisse crisis leading to contagion in other parts of the banking sector, after smaller banks also ran into deep trouble.
The response included new daily access to a lending facility for banks looking to borrow US dollars if they need them — a practice widely used during the 2008 crisis.
The recent failure of California-based Silicon Valley Bank (SVB) brought into focus how a campaign of interest rate hikes by the US Federal Reserve and other central banks, including the European Central Bank on Thursday, was pressuring the banking sector.
The SVB and Signature Bank collapses are among the largest bank failures in US history behind the demise of Washington Mutual and Lehman Brothers during the global crisis in 2008.
In Britain, the Treasury and Bank of England moved quickly, with HSBC swooping to buy the UK arm of SVB, saving thousands of tech firms from being plunged into cash flow crises.
The Bank of England sought to reassure markets again on Monday, saying: “The UK banking system is well capitalised and funded, and remains safe and sound.”
Banks were already lining up for the most brutal round of job cuts since the financial crash even before SVB went under last week, sparking fresh panic.
Goldman Sachs began laying off more than 3, 000 staff at the start of the year. A slowdown in trading activity by clients and a lack of new stock market floats has seen bank revenues tumble.
Credit Suisse told staff to come into the office as normal and that they would still get their bonuses and pay rises on Friday as promised, according to an internal memo.
They will also be in line to get the pay-outs for the rest of 2023 as the merger takes time to go through.