UBS's bailout of Credit Suisse spells trouble for 14,000 Indian workers
By mandating a merger between Credit Suisse Group AG and UBS Group AG after market turmoil, Swiss authorities potentially prevented a catastrophe and calmed anxieties. However, the move could put the jobs of approximately 14,000 Indian workers at risk, as they work in the banks' technology back offices across three cities, including Pune.
The takeover of Credit Suisse by UBS, supported by the Swiss government, is predicted to have the greatest impact on the technology centres of both banks located in India. Mint reported that both banks have approximately 7,000 employees each in their technology centres spread across three cities in India.
After the merger, UBS is expected to concentrate on role rationalisation and cost-cutting, which may result in job cuts at the multi-city facilities known as Global In-house Centers (GIC). The report suggested that UBS will prioritise retaining only the most skilled workers from Credit Suisse.
“India and Pune are likely to be hit by the merger as most of the jobs are backend operation jobs and likely to have duplication with UBS," Vinit Deo, founder of financial advisory firm Posiview Ventures, wrote on Twitter.
UBS has not disclosed the exact number of jobs that may be affected by the merger, but it has hinted that the figure will be substantial. The company stated that it intends to reduce the combined firm's annual cost base by over $8 billion by 2027, which is almost equivalent to half of Credit Suisse's expenses in the previous year.
Despite the upheaval of the previous week, which culminated in the takeover of the 166-year-old lender by UBS Group AG, the bank has assured its employees that promised bonuses and pay raises will still be honoured. In a memo to staff, the bank encouraged them to maintain a "business as usual" approach.
In a memo to employees, UBS CEO Hamers cautioned them not to disclose any confidential information to their new colleagues until the emergency acquisition, which was negotiated over the weekend, had been completed. He emphasised that Credit Suisse was still a competitor of UBS.
“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 the memo.
“Please note that there is no immediate impact on our clients and on our day-to-day working operations. Our branches and global offices will remain open, and all colleagues are expected to and should continue to come to work," they wrote.
Kelleher expressed empathy for the challenges that Credit Suisse employees are likely to face in the coming months and pledged that UBS would make efforts to minimise the duration of the uncertainty.
An internal memo sent by Credit Suisse to its staff stated that the bank would assess which positions may be affected and "endeavour to maintain severance payouts in line with industry standards." The memo confirmed that there will be no alterations to payroll arrangements and that bonuses would still be disbursed on March 24.
At the conclusion of last year, the two banks had approximately 125,000 employees, with nearly 30% of the workforce situated in Switzerland.