Credit Suisse takeover sends shockwaves through London’s banking sector
Bankers in London braced for hundreds of potential job losses and a hit to Britain’s already-dented financial sector after the historic rescue of Credit Suisse by Swiss rival UBS.
Credit Suisse staff had already been seeking to jump ship in recent weeks, sources told Reuters. With that trend potentially accelerating after Sunday’s takeover announcement, senior bankers at rival firms feared not all of the around 5,000 people it employs in London will keep their jobs or find new roles.
“Many Credit Suisse bankers had already been talking to a lot of people for a while [about leaving the Swiss bank]. Those who were more loyal and didn’t do so are now talking to headhunters,” said Stephane Rambosson, co-founder of Vici Advisory which specialises in hiring senior investment bankers.
An executive at a rival London-based wealth manager said they had seen a steady flow of CVs coming in from Credit Suisse bankers.
UBS told Credit Suisse wealth bankers on Monday that it was weighing financial sweeteners for them to stay, as it seeks to reassure key staff.
Credit Suisse employees are wary of what could be massive job cuts, with 10,000 positions potentially on the line globally, sources told Reuters on Saturday ahead of the takeover deal being completed.
The giant lender’s demise could also deal a potential blow to Canary Wharf Group, which manages the financial hub of the same name in London’s regenerated docklands.
Credit Suisse was one of the first major banks to be lured to the area by the prospect of cheaper office space in the early 1990s and houses the bulk of its UK staff in the One Cabot (NYSE:CBT) Square building in the western part of the estate.
“Obviously any overall contraction in financial services does risk from Canary Wharf’s point of view that more businesses will consolidate in the traditional City rather than in Canary Wharf,” said Tony Travers, director of the London School of Economics’ London research group.
The uncertainty surrounding a major banking tenant comes at a delicate time for Canary Wharf, with Europe’s largest bank HSBC separately reviewing its commitment to a 45-floor tower elsewhere on the estate.
UBS has its own headquarters in London’s historic Square Mile, a gleaming 700,000 square foot “groundscraper” where the bank had already begun sub-letting some space after more of its staff took up flexible working since the COVID-19 pandemic.
UBS and Canary Wharf Group both declined to comment.
Outside Credit Suisse’s offices on Monday there was little sign of the tumult. One man who walked out of the building told Reuters that inside the atmosphere was business as usual.
“When you work in banking, these things happen, and there’s no point worrying,” he said, refusing to give any further details.
FUTURE OF THE CITY
In a memo seen by Reuters that was sent to staff on Sunday after the deal announcement, Credit Suisse reassured staff that their bonuses would be paid in full.
News of the emergency rescue comes amid wider concerns about London’s status as a global financial hub, following the slow drain of jobs and assets to other centres after Britain’s exit from the European Union.
However, the Brexit impact on jobs has so far been lower than initially estimated, with about 7,000 staff having moved, according to calculations by consultants EY last year.
Some experts have said Britain’s financial services industry could ultimately benefit from recent bouts of turmoil in the United States and Switzerland.
“London’s financial services industry remains by far the largest in Europe,” LSE’s Travers said, adding that Britain’s regulatory regime may be a pull for international finance at a time when questions are being raised about other jurisdictions.
But the sector is still expecting short-term pain. Credit Suisse’s demise comes amid deep rounds of job cuts by some global banks this year, including Goldman Sachs (NYSE:GS), which is axing 3,000 jobs.
These cutbacks have already dented demand, with a 23% fall in the number of financial services professionals seeking jobs in London in the fourth quarter of 2022, according to recruiting firm Morgan McKinley.
Veterans of the industry were bracing on Monday for the downturn.
“Given both CS and UBS have lots of overlap, I can imagine this will be painful, just another chapter in the industry’s consolidation,” said Tim Skeet, career banker and 42-year veteran of the City.
“It’s another reason why people in this industry always need a Plan B and should expect the unexpected,” he said.