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UBS investors fear job cuts and inflated executive pay after Credit Suisse takeover
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By Nithya Bose in UK Business News, posted April 6, 2023
UBS investors have urged the company to avoid mass job cuts and inflating executive pay after the emergency takeover of its longtime rival Credit Suisse.
They have also raised concerns about the possibility of a mega-bank, which will become the world’s fourth largest.
UBS leaders defended the move by saying “It is a significant milestone, not only for UBS and Credit Suisse but also for Switzerland, for the global financial industry.”
Read More: UBS agrees ’emergency rescue’ of Credit Suisse
But bosses said all alternatives, including a future split or spinoff of Credit Suisse assets, are being considered.
Several shareholders recognised the takeover's possible benefits but expressed "concern about this new giant bank."
They also fear the risk of unjustified pay rises and job cutbacks when executives try to eliminate duplicate roles.
One shareholder said: “Those synergies you were referring to would potentially cost more than 30,000 jobs worldwide.
“These social consequences, also in Switzerland, could be dramatic and the reputation of UBS could also suffer.”
Read More: Credit Suisse accepts $54 billion lifeline
Whereas, another shareholder wanted bosses to be cautious even as they gear up to manage a bigger bank.
The person said: “We need to radically change the culture of bonuses – [which are] the wrong incentives – otherwise, we’ll be waking up one day with UBS having gone down the drain.”
The vice-chair of UBS, Lukas Gähwiler, said it was “simply too soon for any speculation” on possible job losses.
But he noted that the deal was “a Herculean task” requiring more workforce in the short term.
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Shareholders were also concerned the mega-bank could stifle competition, particularly in the Swiss mortgage market.
They suggested UBS to “consider a possible spinoff in one or two years”.
Credit Suisse was sold to UBS in March, as worries over its stability grew following the failure of Silicon Valley Bank earlier that month.
After a spate of scandals, compliance issues, and bad financial bets, Credit Suisse was already struggling to retain clients and make profits.
Source: The Guardian
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