In a shocking turn of events, UBS agreed to take over the struggling Credit Suisse. Now, there are reports that this takeover of the Swiss bank will lead to a workforce reduction of 20% to 30%.
This was reported by Tages-Anzeiger based on information from a senior UBS manager. This comes against the backdrop of a $3.3 billion worth deal in which UBS agreed to buy Credit Suisse.
This deal was formulated by the Swiss government and will help the country's and even the global financial system to avoid a full-blown meltdown.
UBS To Buy Credit Suisse For $3.3 Billion
UBS will be paying a sum of $3.3 billion which is equivalent to 3 billion Swiss francs (CHF), to buy the struggling credit lender. In addition, the said deal will also improve the stability of the global financial system.
However, there's also a downside to this deal as it would cut around 20-30% of the jobs in UBS and Credit Suisse.
Available reports suggest that around 120,000 jobs will be cut after the deal is complete. In addition, it will create a new bank with assets of $1.6 trillion which will create challenges of its own!
In Switzerland alone, around 11000 jobs will be removed, which is not a small number considering the population size of the country.
The US-based arm of the investment bank will also be affected, and job cuts are also highly likely. However, there are reports that UBS is attempting to make a deal with Micheal Klien from Wall Street.
If this deal goes through, it will give control of Credit Suisse's US arm to Michael Klein. In terms of diversification, it will reduce the number of assets owned by the new bank made after the deal between UBS and Credit Suisse.
This means it would become a little easy to manage the bank. However, we can't ignore the fact that it has created too big of a financial institution that will become too big to fail!