The arrival of Sergio Ermotti at the helm of UBS/Credit Suisse might, contrary to expectations, not be such good news for UBS employees. This is mainly because the new CEO has promised to cut jobs.
Those who were looking forward to a return to the «good old times» at UBS with the arrival of Sergio Ermotti are likely to be disappointed. Ermotti has had enough distance from the bank he once headed to now see himself responsible for employees of both banks as he said during the media conference Wednesday.
In response to a question from finews.asia, the new old boss said he would examine the suitability of the management team and employees, regardless of whom they were working for today.
Strong People
«There are very strong people at CS,» the Ticino-based top banker said. In other words, managers and executives of the acquired bank could qualify for positions at the future UBS/Credit Suisse bank.
At the same time, UBS has promised its shareholders to save around 6 billion Swiss francs in personnel costs by 2027. Previously, Credit Suisse management had pledged to cut around 9,000 jobs by 2025, 2,000 of which in Switzerland.
The Script for Takeovers
All in all, this translated to numerous jobs being on the line at UBS. The script for takeovers usually stipulates that the buying party continues to employ at least one-third of the employees of the acquired company, Reto Jauch, managing partner of the executive search firm Schulthess, Zimmermann & Jauch in Zurich, told finews.asia.
He added that this guarantees that the new organization will be functional. «In the case of the UBS/Credit Suisse transaction, the reverse leads up to a third of the employees at UBS being at risk - especially in management functions,» he said.
The Ugly Part
In such a scenario backstabbing seems pre-programmed, on both «sides» of the mega-merger. Furthermore, Ermotti could become the head of the havoc.
Iqbal Khan (Image: UBS)
As finews.asia previously observed, chairman Axel Lehmann, CEO Ulrich Koerner, and chief lawyer Markus Diethelm are among those at the top who have already worked at UBS under Ermotti.
The Path to Becoming CEO
By contrast, wealth management head Iqbal Khan (pictured above), head of UBS Switzerland Sabine Keller-Busse, and head of risk Christian Bluhm might benefit from their previous Credit Suisse experience.
For Khan, in particular, the path to becoming CEO may have been smoothened thanks to Ralph Hamers' departure. Khan leads the business that has helped the bank achieve record profits in recent years and is part of the next generation of managers at the institution. Ermotti on the other hand has already reached retirement age. The end of the acquisition project is expected in 2027.
Poor Cards
The controversial UBS finance chief Sarah Youngwood and the relatively untested chief lawyer Barbara Levi are likely to have rather poor cards for a top job at the new institution.
In the Swiss business, Sabine Keller-Busse will have to assert herself against her Credit Suisse counterpart André Helfenstein. Ermotti will probably also have use for Credit Suisse wealth management chief Francesco De Ferrari (pictured below), a Swiss and Italian dual citizen.
Francesco De Ferrari (image: Credit Suisse)
However, De Ferrari, an Asia specialist, is unlikely to be summoned back to that region, having recently moved with his family from Australia to Milan.
Making Jobs Look Secure
What appears to be redundant on the Credit Suisse side are the investment bank managers, unless they are needed for wind-down, the compliance and risk functions, and the new head of technology Joanne Hannaford.
As previously rumored Francesca McDonagh (pictured below), Credit Suisse's chief operating officer (COO), and UBS chief technology officer (CDIO) Mike Dargan are already set to oversee the acquisition making their jobs look secure for the time being.
Francesca McDonagh (Image: Credit Suisse)
The Return of GMDs?
During Ermotti’s previous era at UBS, he was the highest-paid CEO in European banking. His trusted entourage of Group Managing Directors (GMD), enjoyed particularly high influence and were paid accordingly.
After Hamers abolished the GMD rank in 2021 in a crusade against titles, one can but wonder whether the old hierarchy will also return.
