Swiss banking giant UBS announced acquiring Credit Suisse, another major player in the Swiss banking industry. The acquisition, which is valued at over $3 billion, marks a historic moment in the Swiss financial landscape, with two of the country's biggest banks coming together. 

However, prior to its acquisition facilitated by the government, Credit Suisse was already undergoing a workforce reduction plan of 9,000 job cuts as part of its efforts to salvage its financial standing.

According to report by CNBC, the 9,000 job cuts made by the bank are only the initial stage, as its acquisition by its competitor is expected to result in even more significant layoffs. One of the sources estimates that the ultimate number of job losses could be several times higher than the initial 9,000 figure.

There are notable redundancies resulting from the merger, as the combined workforce of the two banks was nearly 125,000 individuals as of the end of the previous year, with roughly 30% of the staff based in Switzerland.

Although the specific number of job cuts resulting from the acquisition is still uncertain, UBS Chairman Colm Kelleher has acknowledged that the reduction will be substantial. UBS has revealed its intention to reduce the combined firm's annual cost base by over $8 billion by 2027 in a statement released on Sunday, which amounts to approximately 50% of Credit Suisse's expenses from the previous year.

Kelleher expressed the firm's determination to retain Credit Suisse's profitable Swiss unit, despite apprehensions regarding market concentration resulting from the acquisition. He also mentioned UBS's enthusiasm for Credit Suisse's wealth management division, while being less optimistic about its investment banking segment. The investment bank is expected to reduce in size, which could mean that the possibility of a CS First Boston spinoff would not come to fruition.

“Let me be very specific on this: UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” Kelleher said at Sunday’s press conference, reported CNBC. Acknowledging that the next few months will be challenging for employees of Credit Suisse, the UBS chairman expressed empathy and assured that UBS will strive to minimise the duration of the uncertainty. 

An internal memo sent to Credit Suisse employees indicated that the bank will conduct an assessment to determine which positions may be affected by the acquisition, and will strive to provide severance packages in accordance with standard market practices. Payroll arrangements are expected to remain unchanged, and bonuses will still be distributed on March 24, as per the memo. The bank's spokesperson verified the memo's contents.

“We know that many of you will have been following the intense media coverage over the past 48 hours on the future of Credit Suisse and appreciate the enormous uncertainty and stress that this has caused,” Credit Suisse Chairman Axel Lehmann and Chief Executive Officer Ulrich Koerner said in a separate memo.

Credit Suisse has stated that it does not expect any alterations to be made to the upfront cash awards that have already been agreed upon, and will also distribute the cash component of the previously communicated "transformation award." The bank plans to provide further details regarding the equity component and any potential impact on it.

As part of the agreement, UBS Chairman Colm Kelleher and CEO Ralph Hamers will retain their respective positions within the newly combined entity. At a press conference, a spokesperson for FINMA, the Swiss regulatory body, announced that Credit Suisse's current management will remain in place until the deal is finalized, after which their fate will be determined by UBS. Additionally, Hamers advised employees to refrain from discussing business matters with their counterparts at Credit Suisse.

In a communication to UBS employees, CEO Ralph Hamers reminded them that Credit Suisse remains a competitor until the deal is officially completed. At present, there has been no response from a UBS spokesperson regarding the contents of the memo, in spite of an email request for comment.

The merger of the two firms in Asia, where they both hold prominent positions as wealth managers, poses the possibility that clients who have investments with both may shift a portion of their funds to a competitor in order to reduce their exposure to a single entity. Credit Suisse CEO Ulrich Koerner disclosed on Tuesday that they had already reduced their workforce by roughly 8%.