The news of Credit Suisse’s collapse has rocked financial markets all over the world! Although Credit Suisse toppled after two major American banks (Silicon Valley Bank and Signature Bank) disintegrated, it poses a much greater concern for the global economy.

Credit Suisse is regarded by the Financial Stability Board as a systemically important bank—alongside financial giants like JPMorgan Chase. This is due to Credit Suisse being far more globally interconnected, with numerous international subsidiaries. Therefore, UBS’ acquisition of Credit Suisse for 3 billion Swiss francs (S$4.33 billion) continues to make waves in Singapore.

What Happened to Credit Suisse?

In the years leading up to this acquisition, Credit Suisse was plagued by a series of notorious scandals, management shifts, and investment failures. The Credit Suisse CEO Tidjane Thiam resigned in 2020 after an investigation revealed that the bank put its former head of wealth management under close surveillance.

This corporate espionage saga marked the start of Credit Suisse’s downfall; the bank went on to incur huge losses of $5.5billion when Archegos Capital Management collapsed in March 2021. As a result, it triggered a sell-off in Credit Suisse's shares, with share value dropping by 75 per cent.

In the second half of 2022, investor confidence was further shaken by widespread rumours on social media that Credit Suisse was likely to collapse. Clients then withdrew an estimated $119 billion, which hastened the bank’s death spiral.

On 15 March 2023, Credit Suisse’s top backer, Saudi National Bank, refused to provide additional financial support. Despite securing US$54 billion from the Swiss National Bank one day later, Credit Suisse nonetheless failed to restore investor confidence. Finally on 19 March 2023, UBS agreed to take over Credit Suisse and assume its losses.

Implications of UBS’ Takeover on Jobs

After three months, UBS completed the acquisition of former rival Credit Suisse on 12 June 2023. UBS announced that it will be cutting jobs in order to reduce costs and take advantage of synergies; Credit Suisse’s investment banking business will also be downsized.

As such, nearly 10 percent of Credit Suisse employees worldwide had resigned even before the takeover was finalised. For the remaining employees, they are still unsure of what to expect—the futures of the 3,500 professionals in Singapore hang in the balance. Very little is known, except that Credit Suisse private bankers are set to relocate to UBS’ flagship office at 9 Penang Road as soon as July 2023.

In light of the prevailing uncertainty, the Monetary Authority of Singapore (MAS) issued a timely press release. The MAS clarified that the takeover will not interrupt the day-to-day operations of the Singapore entities of UBS and Credit Suisse, which operate under separate licences.

Furthermore, the MAS urged the banks to handle manpower issues responsibly as they iron out the details. The MAS is closely monitoring the situation and “will work with relevant stakeholders to proactively address any impact on employment”.

So What Lies Ahead?

Other financial institutions such as Deutsche Bank are seizing the opportunity to woo talent from Credit Suisse. Several Credit Suisse private bankers reportedly received generous offers increasing their compensation by 50%. Truly, competition for banking and finance talent has only gotten increasingly fierce.

Besides paying a premium in a bid to attract top talent, you can consider creating a vibrant company culture. Champion flexibility; embrace diversity in the workplace. This way, you’ll be ahead in this war for talent!

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