The deal could lead to thousands of job losses for Credit Suisse, according to Switzerland’s finance minister. UBS and the bank are both in trouble.
The global banking system is struggling to navigate uncharted territory and extremely volatile waters. In an attempt to calm investors and customers, the Swiss government has bought the troubled Swiss bank Credit Suisse.
To facilitate the deal and increase liquidity, the Swiss National Bank would provide loans of up to $108 million to the two Swiss banks. UBS would also receive a financial guarantee of $10 billion from the Swiss government in case of losses resulting from Credit Suisse’s takeover.
Janet Yellen, U. S. Treasury Secretary, and Jerome Powell, Federal Reserve Chairperson, said that the Credit Suisse acquisition was a positive development for the U. S. financial sector. The Federal Reserve worked closely with the Swiss National Bank to merge the two Swiss-based banks.
According to The Street, the Swiss National Bank stated that the solution was found to ensure financial stability and protect the Swiss economy during this extraordinary situation with the acquisition of Credit Suisse by UBS.
Keller-Sutter expressed concern that the deal could lead to “many thousand” layoffs in Credit Suisse employees in Switzerland. The two banks offer similar products and services.
Credit Suisse had announced a reduction of approximately 9,000 jobs in October 2022, just months before it fell into crisis. The company had over 50,000 employees around the world by the end of last, with 16,000 in Switzerland. Its balance sheet was worth half a billion dollars.
UBS data showed that the company had over 74,000 employees. This is more than its acquired bank. 28% of its workforce is based in Switzerland. Its total assets amounted to $1.1 billion.
After a series of controversies that beset Credit Suisse, Saudi National Bank (the embattled Swiss bank’s main backer) announced that it would no longer invest in Credit Suisse to avoid tripping regulatory requirements that would kick into effect if its stake increased by 10%. Credit Suisse stock shares fell after the announcement.