- The fate of Credit Suisse’s investment bank hangs in the balance after being sold to UBS.
- The investment bank’s planned spinoff has been put on hold and bankers are bracing for job cuts.
- Insider breaks down the likely investment banking winners and losers by division.
For many Credit Suisse staffers, the bank’s fire sale to UBS over the weekend marked a sad but fitting cap to a years-long cycle of mismanagement and scandal. Now, the big question is what is going to happen to employees of its investment bank.
UBS executives said the $3.25 billion deal to buy Credit Suisse, struck on Sunday, will bolster the larger bank’s considerable footprint in wealth management — while leaving little potential room to improve its conservatively run investment banking operations.
In an effort to shed light on the matter, Insider spoke to Wall Street recruiters, Credit Suisse insiders, and other experts for clues about what will happen to the investment bank, which has sizable operations at its US headquarters in Manhattan. People said they expect Credit Suisse’s planned spinoff of its investment banking operations, announced last year, to be scuttled. They predicted that employees of many investment banking divisions, including equity research analysts and traders, could see pink slips if they don’t land new jobs soon.
“The investment banking business at Credit Suisse is in a lot of trouble,” said Oliver Rolfe, the founder of London-based recruiting firm Spartan International. “There is so much overlap between one or the other.”
“They will either keep the core UBS franchise, or they will look through with a fine tooth comb, the plus points to bring over from Credit Suisse. Sadly, I can see a lot of people being made redundant,” Rolfe added.
Last month, Credit Suisse said it had acquired boutique investment bank The Klein Group for $175 million as part of its effort to create an independent capital markets and advisory business. The new entity was to be headquartered in the US and called CS First Boston.
UBS executives have not confirmed whether The Klein Group sale and investment banking spinoff will continue as planned.
Credit Suisse did not respond to a request for comment for this story, and a spokesperson for UBS referred Insider to the bank’s press release issued on Sunday. But inside Credit Suisse, some employees have been instructed to start looking for new work, one associate told Insider.
“We had a department-wide meeting today and they told us it’s okay to start looking. They encouraged it,” this person said. “I’ve never been in a position before where people are telling us to look for jobs. I think most people have the mindset of wanting to look for something now, because we don’t know what’s going to happen with…