Credit Suisse is reportedly preparing for a fresh round of layoffs that could affect more than 40 employees in one of its China units, as per two individuals with direct knowledge of the matter. This move comes as the company, now a subsidiary of former Swiss rival UBS, seeks to reduce costs following its takeover last month.

According to a report by Reuters, Credit Suisse Securities (China), in which Credit Suisse holds a 51% stake, is anticipated to commence the workforce reduction as early as Monday, affecting around 20% of its local employees.

The publication’s sources, who preferred to remain anonymous as they lacked authorisation to speak to the media, revealed that the most significant impact from the layoffs will be felt by the staff in the wealth management and investment banking divisions.

One of the sources indicated that if the cost control exercise persists, as many as 100 employees from the local unit (which had 234 staff at the end of last year) could potentially be laid off by year-end.

According to one of the sources, the objective behind this move is to tighten spending at the joint venture as Credit Suisse aims to "curb losses". The annual report of the joint venture revealed a net loss of 254.5 million yuan ($35.27 million) in 2022. As of the end of 2022, the local unit had a team of 200 employees, with 58 working in investment banking and 36 in wealth management-related businesses.

Last month, Reuters reported that the job cuts coincide with Credit Suisse and its joint venture partner, Founder Securities, putting the unit up for sale and engaging with potential buyers, including Citi.

Sources informed Reuters that UBS intends to divest its holding after the merger, as Chinese regulations restrict it from having control in more than one securities joint venture. UBS already holds a 67%-owned profitable joint venture in China.

The publication also reported that before UBS had to come to the aid of its crisis-hit crosstown rival earlier this year, Credit Suisse had initiated layoffs in November of the previous year. The layoffs were prompted by the company's challenges in managing a slowing dealmaking and trading business.

During the layoffs in November, Credit Suisse cut approximately one-third of its China-based investment banking team and nearly half of its research department. All of these employees were part of the joint venture.