Inside a day of chaos at Credit Suisse
As they filed into the office on Monday, many Credit Suisse bankers were feeling relieved.
After a weekend of drama that saw the Swiss lender teeter on the brink of insolvency, arch-rival UBS swept in at the eleventh hour with a £2.6bn takeover that staved off collapse.
Failure to strike a deal could have plunged the entire European banking system into chaos, regulators and central bankers feared.
“There were points where it really looked like the whole thing could go down,” says one insider, “so the fact that there is now a resolution is seen as good.
“At the end of the day, clarity is better than no clarity.”
Yet after the briefest of respite, tens of thousands Credit Suisse staff are now facing another period of uncertainty: their jobs are up in the air.
Between them, Credit Suisse and UBS employ 124,000 staff globally, including some 11,000 in London. With significant overlaps, there is a widespread expectation that a significant chunk of them will have to go.
In a memo sent out late on Sunday, Credit Suisse chief executive Ulrich Körner and chairman Axel Lehmann told staff they will “continue to provide severance in line with market practice” and promised bonus payments would proceed as normal on Friday.
“We know many of you have been following the intense media coverage over the past 48 hours and appreciate the enormous uncertainty and stress that this has caused,” Lehmann and Körner wrote.
Credit Suisse, which employs 50,000 around the world, was already in the midst of culling 9,000 roles even before the crisis struck over the weekend. UBS has already signalled that the number is likely to rise.
Colm Kelleher, UBS’s chairman, said Credit Suisse’s troubled investment banking division will be “run down”, as it is not compatible with his company's more cautious approach.
“We will be considerate employers but we need to do this in a rational way,” he told a press conference in Berne.
Mark Yallop, the former chief executive of UBS in the UK, said significant job losses were “inevitable”.
“I would imagine those would be concentrated in the investment banking business, which is partly the cause of the problems the firm is experiencing,” he told the BBC Radio 4’s Today programme.
“And in middle-office, technology and operational roles where bringing two firms together will mean you can run one bigger firm, without doubling up the infrastructure needed to manage it.”
In a message to his own staff, UBS boss Ralph Hamers tried to put a brave face on the shotgun merger, saying the deal was “about growth, which means we need talented people more than ever”.
However, he admitted there would be “opportunity for more efficiency improvements.”
“I know you'll have questions about the future for the combined bank,” he said.
“It's too early to say more, but our guiding principles are clear.”
One seasoned headhunter says his phone has been ringing off the hook since last week as Credit Suisse bankers fret about their future.
The potential exodus of talent presents a problem for UBS.
The headhunter says: “If I were UBS right now, I’d be bunkered down with Credit Suisse’s HR department, trying to work out who the top 100, 250 performers are – and doing everything I could to keep them.
“Without them, there is not much for UBS to gain from this deal. And of course, the people you want to keep the most are also the ones your competitors are going to try hardest to poach.”
Rivals have spotted an opening.
“I think about it as being an opportunity to poach some of the good people,” one chief executive of a rival City investment bank says.
“They also have a number of corporate clients in the UK, so it's also an opportunity on that side too. We'll be putting out feelers and making it known to those companies that we'd be interested in becoming their corporate broker.”
For staff further down the league tables, the future is far less promising.
Outside UBS’s £850m offices in the heart of the City of London, television journalists were pitched up outside on Monday to give reports to cameras.
A short tube ride away at Credit Suisse’s office in Canary Wharf – a white marble monolith occupied by the bank since the 1990s – the mood was more sombre as tight-lipped staff came and went.
“We’ve been told not to talk to journalists,” one said tersely when approached by the Daily Telegraph.
Another of his colleagues simply smiled and drew a hand across his mouth in a zipper motion.
Employees in Zurich are reportedly braced for as many as 10,000 job cuts. The situation looks just as gloomy for the bank’s staff in Asia, where there is thought to be significant overlap with UBS’s wealth management division.
“I have no idea what it means to still continue 'business as usual' when we're not even sure our job is going to be there,” one banker in Hong Kong complained to Reuters.
Surprisingly, Credit Suisse has confirmed it will still go ahead with a planned Asian investment conference in the former British colony on Tuesday.
Missing from the exclusive gathering, however, will be Credit Suisse’s humiliated chief executive and chairman, who only days ago claimed the bank’s turnaround plans were rock solid even as shares went into freefall.
For both UBS and Credit Suisse, the future is uncertain. The speed of the deal meant there was simply not enough time to thrash out the details.
Regardless, analysts on Monday said the deal ultimately looks good for UBS, which will become the undisputed king of money management for the world’s wealthy.
The lender will also get Credit Suisse’s Swiss domestic bank, which is seen as a crown jewel. It puts an end to the competition between the two rivals for Swiss depositors that stretches back more than a century.
For the staff at Credit Suisse staring into the unknown, that will be cold comfort.