UBS to Axe 5,000 Jobs, Credit Suisse to Cut 1,000

ZURICH - UBS is set to cut around 5,000 jobs to save 1 billion Swiss francs ($1.20 billion) while rival Credit Suisse is planning to axe about 1,000 staff, Swiss newspapers reported on Thursday.

Citing an unnamed UBS insider, the Tages-Anzeiger daily said the precise details of the cost-cutting programme still had to be agreed and approved by the board, but should be announced in conjunction with the bank's second-quarter results on July 26.

The newspaper had already reported on Tuesday that thousands of jobs were threatened at UBS and rival Credit Suisse , without giving precise figures.

UBS declined to comment but wealth management head Juerg Zeltner was quoted last week as saying the bank needs to rein in costs given tough market conditions while chairman Kaspar Villiger also said cost cuts were inevitable.
Meanwhile, Credit Suisse is set to cut about 1,000 jobs to save 800 million francs, the Handelszeitung newspaper reported on Thursday, also citing an unnamed insider. The paper said the bank would announce its plans along with its results on July 28.

A Credit Suisse spokesman declined to comment beyond reiterating the bank's standard position that it is always reviewing resource deployment and adjusting its business to market conditions and the needs of its clients.

The Handelszeitung quoted an insider as saying UBS was planning to save about 90 million francs annually by closing 27 offices in Zurich and concentrating staff in five big centres.
Switzerland's biggest bank, which had to be rescued by the state in 2008 after massive losses on toxic assets, slashed staff to around 64,000 from around 78,000 before the financial crisis, but it expanded again in the last year to over 65,000.

Personnel costs have risen sharply as UBS has increased fixed salaries to attract and retain staff given its relatively low bonuses, capped after public outrage during the crisis. It has also hired aggressively in the growth markets of Asia.

A tough second quarter for investment banking earnings, dragged down by sovereign debt woes in Europe and trading jitters, is prompting many banks to cut jobs.

Like other global banks, UBS and Credit Suisse are suffering from sluggish markets, but they face the added burden of high cost bases in Switzerland as the safe-haven Swiss franc soars to new record highs against the dollar and the euro.

The strong franc, boosted by concerns over high government debts in the euro zone and the United States, has prompted many Swiss companies to warn their margins are suffering.
UBS has already said it will cut about 500 technical staff, or nearly 6 percent of its IT workforce.
Analysts said UBS is likely to cut staff at its Investment Products and Services unit, set up in 2010 to provide products to the bank's wealthy clients, where there have been concerns about efficiency after more than 2,000 staff were hired.

Merck plans to cut thousands more jobs

Merck & Co Inc. plans to cut another 12,000 to 13,000 jobs by late 2015 to wring out additional annual cost savings of up to $1.5 billion that can be plowed back into research and deal making.

The No. 2 U.S. drugmaker eliminated 12,465 positions last year, offset by almost 6,500 new hires, reducing its workforce to 91,000 employees as of June 30.

The company, which also reported quarterly earnings in line with forecasts, said on Friday it would cut its workforce by an additional 12 percent to 13 percent from the 100,000 employees it had at the end of 2009 after buying Schering-Plough Corp.

"The new phase of restructuring will create an additional $1.3 billion to $1.5 billion in annual cost savings," company spokesman David Caouette said.

Job cuts will come largely from administrative positions, consolidation of offices and sale or closure of manufacturing sites.

"I think we're going to see other firms continue to expand their cost-reduction programs," Morningstar analyst Damien Conover said, pointing to increasingly difficult reimbursement environments in Europe and the United States.

Canadian Banks to Hire As Wall Street Firms Lay Off

Canadian banks, which brought on bankers displaced by the 2008 financial crisis, have accelerated staffing plans this year to capitalize on Wall Street's woes. The investment banking arms of the Big Five -- Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce -- plan hires for M&A, advisory, underwriting and other investment banking work, according to recruiters, analysts and bank spokespeople.

"Canadian firms are no longer looking at themselves as being a little firm north of the border," said Bill Vlaad, the founder of Vlaad and Company, a Toronto-based capital markets recruiter. "They have a defined presence in the U.S. and they're willing to look for good talent."

Vlaad said his firm has had more phone calls in the second quarter asking for U.S. professionals than in the previous seven quarters combined.

One reason for the hiring: Canadian banks emerged from the debt crisis in better shape than American banks. They took on less risk and were subject to tighter regulations.

The Canadian government required banks to meet a leverage test that maintained the ratio of total assets to total capital at 20 to 1. Many American banks, on the other hand, had been levered 30 to 1, or in the case of Merrill Lynch, 40 to 1, as a result of a 2004 Securities and Exchange Commission rule that allowed banks to more than double their leverage ratios.

Bank of Montreal Capital Markets is continuing to grow headcount after hiring during the U.S. financial crisis, said Perry Hoffmeister, head of U.S. investment and corporate banking, BMO Capital Markets.

"Our view was Wall Street's landscape is changing," Hoffmeister said. "There's an opportunity for a bank like BMO to build its wholesale business. Not only because there are great bankers who wouldn't be available otherwise, but there are fewer competitors. We believe we're taking share and on that basis we intend to keep growing."



Who They Will Hire

Admittedly, Canadian banks won't bring on thousands and provide a job for every laid-off Wall Streeter.

"The number of employees at U.S. firms dwarf Canadian headcount," Vlaad said. While the investment banking business at JPMorgan employs around 26,500 people, the average Big Five bank has between 1,000 to 6,000 employees in that division.

Firms are looking for bankers with specific knowledge of resource-based industries such as mining, oil and gas, pulp and paper and energy sectors, which are the bread-and-butter of Canadian banking, Vlaad said.

Banks are also focused on recruiting senior, seasoned talent. BMO's Hoffmeister said that of the 203 bankers added to his group since 2009, 134 have been senior bankers and traders at the director and managing director level.

"They want senior players who can gain client attention," Vlaad said. "They're looking for generals, not foot soldiers."

Hiring can be expected to take place across both the U.S. and Canada. BMO, for example, will recruit in Chicago and New York, its largest offices, as well as in Houston, Boston and San Francisco, Hoffmeister said. Nearly half of BMO Capital Market's staff is U.S.-based.

The demand doesn't look like it will abate any time soon.

"If you're in a strong position in Canada and right across the border there's an opportunity in the investment banking market to build out a capital markets business, it makes a lot of sense to do that," Hoffmeister said. "That's why BMO made a strategic decision to expand capital markets. The landscape had changed, and the quality of bankers willing to move was pretty great."

CIBC is thinking along the same lines. A source familiar with the matter said that the bank will continue to pursue a hiring strategy consistent with the growth opportunities in the investment banking arm the bank is currently experiencing. Over the past three years, CIBC has added talent to its offices in Canada, New York, London and Asia. The bank declined to comment.



Financial Crisis Hiring Surge

Having emerged from the financial crisis in relatively stable positions, Canadian banks were able to bring on staff.

Scotia Capital, the investment banking division of Bank of Nova Scotia, grew to 1,776 employees in the second quarter 2011, up from 1,553 in the second quarter of 2009, the official end of the recession, according to the National Bureau of Economic Research.

Toronto Dominion has added around 400 employees to its investment banking division since the second quarter 2009.

BMO grew to 2,043 employees in the second quarter 2011 from 1,821 in the second quarter 2009.

CIBC employs 1,144 in its investment banking division as of the second quarter 2011, compared to the 1,089 it had in second quarter 2009.

RBC Capital Market's U.S. investment banking staff has grown by more than 25% over the past three years, the most recent information that was available. The unit now has 370 bankers who work in the U.S.



Canadian Hiring Freeze

While Canadian banks have maintained a stronger position than their American counterparts coming out of the financial crisis, they haven't been immune to some of the market forces dragging down business this year.

Like U.S. and European banks, Canadian banks are experiencing low trading volumes, said Michael Goldberg, a financial services analyst and vice president at Desjardins Securities, the brokerage unit of Desjardins Group, the Quebec-based financial group. "They had been building up desks to grow the trading side of the business, but I don't think they will want to do that to the same extent now."

One managing director at a Big Five bank who did not want to be named said he had seen several trading teams imported from the U.S. over the past several years, but that he doesn't expect the trend to continue in light of the sluggish trading activity.

"The decline in [trading] revenue is prevalent on both sides of the border," he said. "It's a function of reduced hedging volume plus a general lack of risk taking, not to mention much narrower bid/offer spreads."

While banks won't add to trading teams, they will lay off lower-performing employees and replace them with top producers.

"If there's going to be any activity in sales and trading, it will be to increase the quality of existing teams," Vlaad said. "They're going to get rid of their bottom tier and upgrade their talent."

Canadian banks also won't be hiring tech bankers. "Canadians want the meat-and-potatoes businesses, things they can touch and feel," Vlaad said. "That's how they establish their business. They don't want high tech and you won't see Canadian banks with huge businesses in Silicon Valley. They don't have that risk appetite."

Laid Off On Wall Street: Lowest-Paid Workers Losing Jobs

NEW YORK -- Layoffs have returned to Wall Street as investment banks bemoaning economic malaise and disappointing revenues are moving to pare their payrolls, by far their largest expense.

Goldman Sachs and Morgan Stanley have announced plans to eliminate hundreds of employees, UBS and Credit Suisse are reportedly preparing to cut thousands of jobs and Barclays Capital has already imposed two rounds of layoffs this year.

But as banks again resort to pink slips, they appear inclined to spare the most generously compensated executives -- the people who enjoyed the biggest gains from the bubble in mortgage-related investments that savaged the economy -- while instead dismissing less-expensive employees.

"Wall Street is a cutthroat business. That's how the capital market system works," said Sung Won Sohn, a former Wells Fargo chief economist who is now a finance professor at California State University Channel Islands. "The more seasoned, experienced, higher-paid people have a lot more connections and contacts. That is very, very valuable. Whereas junior, younger people are more replaceable."

In June, Barclays Capital cut employees, including first-year analysts who had been hired last year out of college to work in the New York investment banking division, a person familiar with the situation told The Huffington Post. Morgan Stanley released plans earlier this year to lay off up to 300 workers in its retail brokerage, including trainees. At Goldman Sachs, employees losing their jobs will include "junior people," the firm's chief financial officer said during a conference call this week.

But being seasoned doesn't provide a job guarantee, either. In the end, the decision comes down to the company's bottom line, and whether an employee is capable of fattening it.

"Length of time at the firm doesn't matter, it doesn't help you," said Kim Woodle, 54, who was laid off from his job as a computer programmer at Morgan Stanley in 2009, in the midst of the Great Recession.

Boston: State Street Plans to Lay Off Hundreds in IT

State Street Cuts 850 Tech Jobs

State Street announced plans to cut 558 technology jobs in Massachusetts.

The Boston-based financial services firm said it will eliminate 530 of the positions over the next 18 to 20 months, while another 320 employees will be transferred to IBM or Wipro.

State Street calls the job cuts part of an “IT transformation.” Late last year, the company unveiled a massive cost-cutting plan that envisioned eliminating 1,400 positions, including 400 in Massachusetts. The company’s Bay State head count is about 12,600. Worldwide, the company employs 29,450 people.

Cisco Systems Inc. may cut about 5,000 jobs in August

NEW YORK (AP) -- Networking gear maker Cisco Systems Inc. may cut about 5,000 jobs in August in one of its largest work force reductions, Gleacher & Co. analyst Brian Marshall said on Monday.

Marshall said that while difficult, the move is "required in order to maintain the `competitiveness'" of Cisco going forward. Cutting 5,000 jobs would mean a nearly 7 percent work force reduction for Cisco, which has about 73,400 employees worldwide. Marshall said the reduction would be similar to large job cuts the company had in 2001 and in 2002.

Cisco said in May that it's set to eliminate thousands of jobs as part of its broader plan to cut costs and increase profits. CEO John Chambers said he wants to cut annual expenses by $1 billion, or about 6 percent. He did not say how many jobs the company was planning to cut, mainly through an early retirement program.

Cisco spokeswoman Kristin Carvell said the company will provide more details on cost cuts, including layoffs, when it announces quarterly earnings Aug. 10.

Marshall said this would be the third major initiative of Cisco's restructuring program in the past six months. The company restructured its consumer business in April, killing off its Flip video camcorder business. In May, it reorganized its management structure.

"While we view this as positive, we need the company to reset its long-term financial targets," wrote Marshall, who rates Cisco's shares "Neutral" with a target price of $17. A fourth and "necessary step," he said, would be a formal lowering of Cisco's financial targets. Cisco currently expects annual revenue to grow by 12 percent to 17 percent.