'Nobody has a clue what happens next': Industry insiders react to Credit Suisse's rescue takeover by UBS

A deal to sell Credit Suisse to UBS was struck on Sunday amid increasing turmoil for the Swiss bank.
Insiders say executives looked exhausted on a Monday call, and that "nobody has a clue what happens next."
One recruiter told Insider they'd seen an influx of resumès of a similar scale to the 2008 financial crisis.

After 167 years, Credit Suisse's future is now in the hands of its Swiss rival, UBS.

UBS on Sunday agreed to buy Credit Suisse for more than $3 billion in a deal brokered by Swiss regulators. In what was a turbulent period for the global banking sector, Credit Suisse's share price dropped last week as investors worried over the bank defaulting on its debt and depositors pulled money from the Swiss bank.

Colm Kelleher, UBS chairman, called the acquisition "an emergency rescue."

Given that Credit Suisse says it operates in around 50 countries and employs more than 45,000 people, this takeover will impact employees all over the world and create panic in the banking industry.

Executives looked 'very downbeat' at an all-company meeting

Headquartered in Zurich, Credit Suisse has a large presence in Europe. According to the Financial Times, the bank has around 16,000 staff in Switzerland and more than 5,000 employees in London. As a result, Sunday's deal has rattled the banking sector in Europe and employees are scrambling for answers.

A European-based headhunter told Insider they'd "heard there were some tears" from Credit Suisse veterans about the prospect of the bank's takeover.

It seems that rank and file staff weren't the only ones who were upset.

Credit Suisse board members looked "absolutely wrecked" in a video call they hosted Monday at 10 a.m. CET in which they tried to reassure staff about the bank's takeover deal, an employee said.

Credit Suisse CEO Ulrich Körner said the bank's board had worked "day and night" over the weekend on the deal, according to an employee who was on the call. The employee, whose identity is known to Insider, asked to remain anonymous to protect their employment.

They said Körner was "very downbeat and looked exhausted" and "did most of the talking" in the call but "should not have, given his demeanor."

They added: "The vibe was very much 'this is very rushed, nobody has a clue what happens next, it's basically up to UBS but sit tight'."

On the call, staff were asked to stay focused on clients, support each other over what was likely to be a "difficult" next six months, and conduct business as usual while a transition plan was put in place, the employee said.

Staff were also told there was no immediate threat to jobs but the transition plan would include changes to resourcing, the employee said. They were told hiring would stop apart from critical replacement roles, the employee added.

Another employee who requested to remain anonymous to protect their identity told Insider they watched the press conference and thought Axel P. Lehmann, Credit Suisse's chairman, had "cried a lot."

As Credit Suisse's outflows accelerated over recent months, it appears its employees have hunted for other postings. One industry headhunter in the UK said their desk has piled up with job applications from Credit Suisse workers for around a month.

"The speed at which I am receiving CVs and enquiries for roles is just remarkable," they told Insider. "The last time this happened in my career was during the financial crisis."

The outlook was calmer in Asia. UBS chief executive Ralph Hamers made clear in a statement announcing the deal that acquiring Credit Suisse would support its ambitions in Asia.

Bharisha Mirpuri, senior client solutions manager at Randstad Hong Kong Recruitment Agency, told Insider she expected there to be some turmoil in Asia, but nothing significant. Although, she said it was still early days.

"If you think about it from a junior perspective, someone who's just started working, or someone who's got kids, people are going to be looking for a little bit of insurance," Mirpuri said. "So there will be situations where people start looking, but that comes with any acquisition, any change."

A Hong Kong-based recruiter told Insider there was no sign of panic yet in Hong Kong and Singapore markets.

What happens next

UBS has made clear it didn't really want to acquire Credit Suisse, with UBS chairman Colm Kelleher telling analysts on Sunday that "it's a historic day in Switzerland and a day, frankly, we hoped would not come."

Still, the Swiss bank now has to make the deal a success.

Kelleher said in a statement announcing the deal that "acquiring Credit Suisse's capabilities in wealth, asset management and Swiss universal banking will augment UBS's strategy of growing its capital-light businesses."

UBS chief Ralph Hamers meanwhile struck an upbeat tone, saying "the combination supports our growth ambitions in the Americas and Asia while adding scale to our business in Europe, and we look forward to welcoming our new clients and colleagues across the world in the coming weeks."

Still, the future of Credit Suisse's investment banking business hangs in the balance. And heavy job cuts are almost certain.

UBS said that the combination of the two banks was "expected to generate annual run-rate of cost reductions of more than USD 8 billion by 2027."

Credit Suisse didn't immediately respond to Insider's request for comment.

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Contributer : Business Insider https://ift.tt/rWdGpgA

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