(March 20): As the demise of Credit Suisse Group AG reverberated from Sydney to New York City on Monday, workers were given a clear message: get back to work.
Promised bonuses and pay increases will still be paid after a tumultuous week that ended in the 166-year-old lender being taken over by its largest rival UBS Group AG, the bank said in a memo to staff that urged them to continue “business as usual”.
UBS reminded employees not to divulge any business secrets to their new colleagues, as long as the emergency acquisition hammered out in crisis talks over the weekend hadn’t closed. “Credit Suisse is still our competitor,” chief executive officer Ralph Hamers wrote in a memo to employees.
While it wasn’t quite business as usual at Credit Suisse offices from Tokyo to New York, there were no bankers leaving buildings with personal belongings stuffed into cardboard boxes, one of the defining images of the 2008 financial crisis. Instead, executives sought to rally the troops as concerns about jobs mixed with a sense of relief that the firm had at least skirted the fate of Lehman Brothers Holdings Inc almost 15 years ago.
“We know that many of you will have been following the intense media coverage over the past 48 hours on the future of Credit Suisse and appreciate the enormous uncertainty and stress that this has caused,” chairman Axel Lehmann and CEO Ulrich Koerner said in a memo.
“Please note that there is no immediate impact on our clients and on our day-to-day working operations,” they wrote. “Our branches and global offices will remain open, and all colleagues are expected to and should continue to come to work.”
In Asia, where offices from Singapore to Tokyo were largely quiet Monday morning, bosses sought to portray the deal as situation from which both sides could benefit. Edwin Low, CEO of the region, called his counterpart at UBS, Edmund Koh, saying the merger should be executed with clients in mind, as both teams will eventually work together, according to a person familiar with the matter.
A spokesperson for Credit Suisse declined to comment.
Koh, in a separate memo, wrote the deal offers an “exciting moment” for UBS and will help accelerate its strategy and strengthen its wealth management capabilities.
UBS hasn’t detailed how many jobs may be at stake from the merger, though it indicated the number will be significant. The firm said in a statement Sunday it plans to cut the combined company’s annual cost base by more than US$8 billion by 2027. That’s almost half of Credit Suisse’s expenses last year.
Asia is one region that could be affected because the two banks hold top spots in wealth management in the region, which carries the risk that clients who currently have money with both firms move part of it to a competitor to avoid having too much exposure to a single firm.
In Zurich, where UBS is also adding a large private banking business, its wealth management head Iqbal Khan joined a Credit Suisse townhall, telling relationship managers there will be retention packages. Khan, who used to run international wealth management for Credit Suisse before moving to UBS, sought to assure his former colleagues that he would promote an atmosphere of tolerance and respect after the merger, said another person.
The mood was darker for investment bankers in the US, who were still waiting to hear about the fate of an ambitious Credit Suisse plan to spin out the capital markets and advisory business under the storied First Boston brand. UBS on Sunday didn’t say if that plan was still intact, but Chairman Colm Kelleher made clear he was determined to cut back the securities unit.
“Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” Kelleher said at a press conference announcing the deal.
Walking to work at 7.30 on a cold Monday morning in New York, a 23-year-old in his first year at Credit Suisse cradled a big cup of coffee. He was eight years old during the financial crisis, he said, so living through Wall Street calamity is a new feeling. His plan is to keep his head down and keep moving forward.
The mood was bleaker inside two of the coffee carts around the art deco tower that houses Credit Suisse’s US headquarters. A few feet away, one man in a Barbour coat said executives let him down. Their strategy hadn’t been solid enough to avoid the fire sale, he said.
Nearby, walking from Park to Madison, an investment banker in a green North Face jacket used spikier language to describe his annoyance at Swiss bosses. The way he sees it, they don’t understand investment banking and its necessary risks.