Switzerland to face winners and losers in Credit Suisse layoffs.

Switzerland to face winners and losers in Credit Suisse layoffs.

Switzerland’s Financial Capital Faces Wave of Job Losses Following Credit Suisse’s Collapse

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Zurich, the financial capital of Switzerland, is bracing itself for the biggest wave of job losses in over a decade following the collapse of Credit Suisse earlier this year. This comes after the government engineered a rescue of the 167-year-old bank by merging it with rival UBS, which is now expected to result in tens of thousands of job cuts.

While UBS has not provided specific details yet, insiders and analysts suggest that it might cut about a third of the combined group’s global workforce, amounting to approximately 30,000-35,000 jobs. Within Switzerland, up to 10,000 jobs could be affected, with Zurich bearing the brunt if UBS goes ahead with its preferred option of absorbing Credit Suisse and cutting overlapping jobs and operations.

This potential wave of job losses would be the biggest setback for the Swiss finance sector since the 2008 financial crisis. Back then, UBS had to be rescued by the government, resulting in layoffs and a 2.3% shrinkage in the Swiss economy in 2009.

Despite the imminent challenges, Switzerland’s economy is currently in much better shape, with a national unemployment rate of just 1.9% in June, and 1.6% in the Zurich area, one of the lowest across Europe. This suggests that the country could absorb a significant number of people cut from the merged bank over the next 24-36 months.

Fredy Hausammann, the headhunter who leads the Swiss arm of Amrop Executive Search, explains, “In Switzerland, in the financial services industry, there is a shortage of qualified staff across many disciplines.” This positive outlook indicates that there are good job prospects for some in the finance sector.

However, Hausammann also highlights that it could be more challenging for those in higher management positions, such as senior and managing directors, to find suitable replacements elsewhere. “The large banks have many highly paid very specialized roles, where frankly there is very little demand in the market outside UBS and Credit Suisse,” he adds.

It is important to note that job cuts at Credit Suisse will impact both Swiss and foreign nationals on its payroll. For some, this could mean leaving Switzerland if they cannot find new employment opportunities.

Furthermore, global banks in general have been cutting staff, primarily in merger and acquisition (M&A) and capital markets businesses, due to prevailing weaknesses in those areas.

Nevertheless, the outlook remains relatively positive for many employees at Credit Suisse. One middle manager, a foreign national, reveals that he has already been approached by financial services firms with job opportunities. However, he has yet to actively apply for any positions, waiting to see if he will receive a severance package or a job offer from UBS. “Currently, all options are not too bad, which is why I haven’t been applying yet,” he explains.

Skills Mismatch and Labor Market Concerns

To ease public concern about possible waves of job cuts, the Swiss government emphasizes the shortage of labor in all sectors. They assert that the Swiss labor market would be able to absorb any mass layoffs, considering this shortage of workers. Adecco, a Swiss staffing company, supports this claim, stating that demand for finance professionals, including financial analysts, accountants, and controllers, remains robust. In fact, demand has increased by 7% this year compared to the second half of 2022.

However, there is a notable skills mismatch between the open positions and the skill sets of currently unemployed individuals within the financial sector. Arbeitgeber Banker, an association representing employers at Switzerland’s banks, reports that there were 6,681 job openings in the Swiss financial sector at the end of June, while simultaneously, there were 2,411 unemployed individuals within the sector. This mismatch is a challenge, as many of the current vacancies do not align with the profiles of the unemployed workers.

Balz Stueckelberger, the head of the association, comments that positions that are more frequently being automated, such as back-office roles, may be harder to fill. This issue further highlights the importance of bridging the skills gap. The Swiss Bank Employees Association has previously demanded that UBS freeze layoffs until the end of 2023 to ensure job security for their members.

Despite these challenges, some employees from Credit Suisse have already found new opportunities. UBS Chief Executive Sergio Ermotti revealed in June that around 10% of Credit Suisse staff had already left the company. Swiss banks are actively seeking relationship managers with strong client relationships and solid books, leading to new hires and expanding teams. For example, Lombard Odier announced its hiring of Credit Suisse banker Marco Arnold and his team to open a new office for the Swiss wealth manager in Zug. EFG, another Swiss private bank, also plans to take advantage of the talent available and hire across geographies and functions. They have already surpassed their target of hiring 50-70 client relationship officers this year and anticipate reaching triple digits by the end of 2023.

With the upcoming wave of job losses in Switzerland’s finance sector, there are both challenges and opportunities. While the economy remains strong and there is a shortage of qualified staff, finding suitable replacements for specialized roles may be more difficult. Additionally, concerns about a skills mismatch between job openings and the profiles of the unemployed within the financial sector persist. However, the proactive hiring strategies of other banks and financial institutions indicate a positive outlook for those affected by the job losses.