Thousands of jobs look set to go as the Swiss government backed the bailout of troubled Credit Suisse by giant UBS on Sunday amid fears of a global banking crisis.
Global stock markets plummeted Monday after it was announced that UBS would be taking over Credit Suisse. On the news of the takeover, Hong Kong’s main index slid 2.7%. London, Frankfurt, and Paris all opened down by more than 1%. Shanghai, Tokyo, and Sydney all nosedived.
Oil prices also plunged by more than $2 per barrel.
Credit Suisse’s shares collapsed by 63%, while UBS saw its share value sink by 14%.
UBS agreed to take over the ailing Credit Suisse for $3.25 billion on Sunday after a weekend of frantic talks amid fears of a collapsing Swiss banking system. The shock follows the collapse of two major U.S. banks, Silicon Valley and Signature.
The Swiss National Bank has agreed to back the deal to the tune of $100 billion in financial guarantees while the government has also provided a default guarantee to halt the collapse of UBS.
But according to a leaked internal memo that emerged today, senior bankers are still set to receive their bonuses.
The bailout will not ease the fears of the vast majority of UBS’s 74,000 workers worldwide. Even before news of the takeover, Credit Suisse was in the process of cutting 9,000 jobs.
UBS chairman Colm Kelleher said that it was “too early” to make a judgment on whether there would be job cuts.
But he said the deal “represents enormous opportunities” for his bank to “downsize” Credit Suisse to align it with what he described as the more “conservative culture” of UBS.
Morning Star
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