FirstFT: Big job cuts expected after UBS takeover of Credit Suisse

Today we start with the latest on Credit Suisse and the repercussions of UBS’s takeover of the bank. Tens of thousands of jobs are at risk, with Credit Suisse’s domestic business and its investment bank expected to bear the brunt of job cuts.

People familiar with UBS’s plans said it was too early to tell exactly how many roles would go, but it could be as much as a third of the 120,000 jobs in the combined group.

The Swiss government now also has to reckon with upset bondholders after orchestrating the shotgun marriage that wiped out $17bn of Credit Suisse’s additional tier 1 (AT1) bonds. One fund manager said “this is against the law” while another called it a “policy mistake”.

The EU has pledged not to follow Switzerland in upending creditor hierarchies, with authorities putting out a statement stressing that common equity instruments would still be the first to absorb losses. The Bank of England made similar remarks.

In Switzerland, news of the rescue has been met with disbelief and questions of how a household name with an illustrious history fell so quickly.

Two more recommendations to help make sense of it all:

We’ve also gathered all our latest analysis and comments on the banking turmoil in one place for ease of access.

Here’s what else I’m keeping tabs on today:

• Interest rates: The US Federal Reserve faces a dilemma on whether to increase rates when it begins its two-day meeting. Its European counterpart has already admitted the banking turmoil could force a stop in raises.

• Economic data: The UK has public sector borrowing numbers and France has retail sales, both for last month. Zew publishes its economic sentiment study for Germany.

• Nato annual report: Secretary-general Jens Stoltenberg presents the report days after welcoming Turkey’s decision to move ahead with ratifying Finland’s bid for membership in the defence alliance.

What are your thoughts on the turmoil in the banking sector? We’d like to hear from you at firstft@ft.com. Thanks for reading FirstFT.

Five more top stories

1. US bank chief executives are seeking a new plan for First Republic after a $30bn lifeline failed to stop a sharp sell-off. Shares of First Republic closed down 47 per cent yesterday, prompting JPMorgan chief Jamie Dimon to explore other options to support the struggling lender.

2. Accounting rules should recognise unrealised losses on securities such as those that helped topple Silicon Valley Bank, advocates of “fair value” accounting urge. Here’s why they think the approach could have helped avert a disaster.

3. A short seller warned US regulators about Signature Bank in January, pointing out that the lender lacked basic controls. The now collapsed bank had lent money to Alameda Research, the hedge fund affiliate of bankrupt crypto exchange FTX.

4. London’s Metropolitan police is guilty of “institutional racism, misogyny and homophobia” and should be broken up if it cannot effect a complete overhaul, said a review. Read more about one of the most damning reports of a British police force.

5. Emmanuel Macron’s government survived two no-confidence votes brought by opposition lawmakers yesterday and took a step closer to enacting the French president’s unpopular pensions reform after having overridden parliament.

The Big Read

“You will merge with UBS and announce Sunday evening before Asia opens. This is not optional.” This was the message delivered to Credit Suisse from Swiss regulators on Wednesday, according to a person briefed on the conversation. Here’s how Swiss authorities forced through the deal with UBS.

We’re also reading . . . 

Chart of the day

The Euro Stoxx Banks index closed up 1.3 per cent yesterday, as many of Europe’s biggest names recovered from early declines. The gains mirrored those in the US, where investors are assessing efforts to address turmoil in the sector and awaiting the Fed’s upcoming interest rate decision.

Take a break from the news

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Additional contributions by Gordon Smith and Emily Goldberg