Up to 35,000 jobs could be cut at UBS following the Credit Suisse integration with five rounds of layoffs to reportedly start in mid-2024. How will Asia fare in the multi-billion dollar cost-saving exercise?
UBS is seeking to execute five rounds of job cuts from June to November, according to Swiss newspaper «SonntagsZeitung», with the aim of laying off 50 to 60 percent of former Credit Suisse staff. According to analyst estimates, up to 35,000 jobs could go globally as part of efforts to reduce more than $10 billion in costs.
At end-2023, Asia’s headcount surged to 27,638, accounting for 24 percent of the enlarged Swiss financial group’s overall workforce. How could the planned job cuts affect the region in 2024?
Investment Banking
One of the most obvious areas due for cuts will be in investment banking in mainland China. UBS currently holds majority stakes in two onshore securities units with local regulations allowing only one. According to a «Bloomberg» report, discussions are underway for a deal to offload its stake in Credit Suisse Securities (China). Potential takers include Ant Group, Citadel Securities and Beijing State-Owned Assets Management Co.
Hong Kong could also face pressure amid a deal slump as the city recorded a 15-year low in funds raised via IPOs in the first quarter with just $600 million. UBS had already reportedly axed 20 investment banking jobs locally in March.
Private Banking
In wealth management, there are also signs of where cuts may occur. One area could be private bankers that focus only on smaller high net worth clients after the Swiss firm reportedly sought to shut accounts with a balance of $2 million or less due to limited profitability.
It is already undergoing a headcount reduction of 70 in Greater China and Singapore, including voluntary exits after bonus payouts. Overall, UBS has the largest wealth management workforce in Asia with a total of 1,101 client advisers as of the end of 2023. It is also the largest in terms of assets under management (AUM), by far, according to finews.asia’s 2023 Private Banking AUM League Table.
Asset Management
Within asset management, the outlook is less clear. UBS currently owns two onshore units in China which is allowed under local rules. According to a «Reuters» report in July 2023, UBS Asset Management, which is now under the new leadership of global head Aleksandar Ivanovic, was undergoing a review of its mainland business that could take over a year. An older plan to form a new wholly-owned fund unit has been shelved while a decision has been made to retain the Credit Suisse joint venture with ICBC.
Former APAC head Min Huang has left to join Morgan Stanley’s investment management arm. Separately, UBS Asset Management Shanghai is laying off one-third of its 50-strong team while closing up to 17 out of 19 private funds.
Growth Driver
Asia is not expected to be a top source of job losses, especially in wealth and asset management which are expected to be key growth drivers. Group CEO Sergio Ermotti recently said that the region will account for 20 percent of global AUM in five or six years, up from the current level of 15 percent.
«Wealth management and asset management, in general, are two industries that are likely to continue to grow because of the needs of people to save and invest for retirement, for planning,» Ermotti said during an event in March. «Wealth creation is a secular trend that sustains our business model.»
