At least five high-profile Credit Suisse executives are leaving the company, UBS said in a memo Monday — the day UBS’s acquisition of the smaller Swiss bank closed.
Credit Suisse’s CFO, Dixit Joshi, is out, along with the bank’s investment-banking co-head, David Miller; its general counsel, Markus Diethelm; co-head of markets, Ken Pang; and Edwin Low, head of the Asia-Pacific region, UBS said in the memo seen by Bloomberg and the Financial Times.
Among Credit Suisse executives staying are Joanne Hannaford and David Wildermuth, two former Goldman Sachs execs the Swiss bank poached weeks apart in 2021. Hannaford, Credit Suisse’s ex-chief technology officer, will become head of tech for UBS’s U.S. wealth unit, UBS said. Wildermuth, meanwhile, has been appointed chief risk officer for UBS’s Americas division and for the banks’ U.S. legal entities.
Four other Credit Suisse executive board members have retained their roles, UBS said. Francesca McDonagh will continue as Credit Suisse’s chief operating officer; Christine Graeff, as Credit Suisse’s head of human resources; Andre Helfenstein, as CEO for the Swiss domestic unit. Nita Patel will stay on as chief compliance officer and will take on a global compliance, regulatory and governance leadership role for the combined bank as the integration of the two continues.
“While the transaction has closed, the most crucial phase is just beginning,” UBS Chair Colm Kelleher and CEO Sergio Ermotti wrote in a separate email Monday seen by the Financial Times. “We cannot cling to old rivalries, or be distracted by the integration and external pressures.”
UBS executives, meanwhile, have issued roughly two dozen “red lines” prohibiting Credit Suisse employees from a number of activities, people with knowledge of the matter told the Financial Times.
For example, Credit Suisse employees must ask UBS executives for permission to extend loans backed by assets such as yachts, ships and real estate of more than $60 million, the publication reported.
Credit Suisse bankers are also forbidden from taking on clients from nearly 30 countries including Libya, Russia, Sudan and Venezuela, without approval from UBS managers — a measure meant to limit the risk of money laundering, bribery and corruption.
Under new rules, employees of Credit Suisse’s Swiss bank must ask UBS for permission to extend loans to borrowers outside the country. And Credit Suisse bankers are no longer allowed to trade in a number of financial products, including Korean derivatives — a subset that cost the bank $120 million in 2006, according to the Financial Times.
“We will never compromise on UBS’s strong culture, conservative risk approach or quality service,” Kelleher and Ermotti wrote Monday in an open letter.
The right-sizing challenge
Among management’s top remaining challenges is right-sizing the workforce — although Ermotti told Swiss broadcaster SRF in an interview Monday that roughly 10% of Credit Suisse employees have left the bank in the months leading up to the acquisition’s closing.
“I’m sure that with early retirement, the fluctuation we will see and also a generous social plan, we will be able to bring this situation under control, but it will still be painful,” Ermotti told a conference Friday, according to Bloomberg.
Roughly 20% of the 160 leadership positions at the combined bank are coming from Credit Suisse, a UBS spokesperson told Bloomberg.
Former Credit Suisse wealth-management chief Francesco de Ferrari will remain as an adviser to Iqbal Khan, UBS’s private-banking head.
Michael Ebert, Miller’s former counterpart atop Credit Suisse’s investment bank, will lead the Americas investment bank and serve as head of Credit Suisse business within the UBS investment bank, UBS said.
Simon Grimwood, Credit Suisse's global head of tax and finance change, will succeed Joshi as Credit Suisse CFO. Grimwood has been managing integration planning since March, the bank said.
Jake Scrivens will replace Diethelm as general counsel.
Credit Suisse’s global head of operations, Isabelle Hennebelle, will join the board in her existing role.
Another big decision that looms for UBS is what to do with Credit Suisse’s domestic business. UBS had planned initially to fully integrate the unit but has backtracked, saying all options, including a sale or spinoff, were on the table. UBS said it would make a decision by this year’s third quarter. The bank also aims to detail integration plans for each of its business units — and for activities it means to wind down — by the fourth quarter, according to Reuters.
"We need to define the details and apply all that we have learned and discussed over recent weeks,” Kelleher and Ermotti said Monday. “And across all our businesses, we are planning efficiently and thoughtfully and will share information with you as soon as we can.”
UBS said last week it could close its $3.25 billion acquisition of Credit Suisse as early as Monday.
The Swiss government agreed last week to provide UBS with up to 9 billion Swiss francs ($10 billion) to protect it from losses after UBS fronts the first 5 billion francs.
The combined bank will have a balance sheet of $1.6 trillion and oversee $5 trillion in assets. Under the deal closed Monday, UBS and Credit Suisse will each continue to have their own subsidiaries and branches, according to a UBS press release. Credit Suisse will no longer trade on the New York Stock Exchange, and Monday is its last day of trading on the Swiss SIX exchange.
UBS last week said it would delay issuing its second-quarter earnings results until Aug. 31. The bank is expected to see a massive profit for the three-month period because it bought Credit Suisse for a fraction of its fair value.
UBS expects its CET1 capital ratio to be around 14% for the second quarter and stay there throughout 2023. The bank said it anticipates reductions in risk-weighted assets will offset Credit Suisse’s operating losses and restructuring charges