Bankers out in the cold as reality bites

UBS has begun a coaching programme designed to cushion the blow for employees who have lost their jobs Keystone

Swiss bankers are facing the unwelcome prospect of life without a living as the country's top banks shed jobs to reduce overheads.

UBS announced 8,700 cuts last week – 2,500 in Switzerland – while Credit Suisse axed 5,300 posts at the end of last year, 650 in Switzerland. Some observers predict this is the tip of the iceberg unless conditions improve.

UBS said the job losses were necessary to save up to SFr4 billion ($3.4 billion) by the end of 2010.

But Helvea analyst Peter Thorne felt there could be more pain to come. “So far, UBS hasn’t cut many more investment banking staff than its rivals,” he said. “Its investment banking headcount was around 22,000 at the peak and it’s now down to 17,000. I’ve got it going down to 15,000 and it could easily fall to 10-12,000.”

The Swiss media at the weekend were going even further, predicting up to 10,000 local job losses, or one in ten of all Swiss banking employees, by the end of next year if the market continues to lose money at current rates.

Uncertain future

One UBS employee of 40 years told swissinfo about his fears at the bank’s annual general meeting in Zurich last Wednesday.

“People are afraid and are uncertain about the future. I am 58 and have to work four years and I don’t know what will happen to me,” Heinz Hartmann said.

“But we have to cut the costs and it is only possible by cutting staff. There is no chance by reducing travel budgets or salaries. The only way we can get back to profitability within the next two years is to cut employees.”

UBS has initiated a coaching programme designed to cushion the blow for employees by giving careers advice, part-funding training courses and offering counselling. The canton Zurich authorities have started a telephone hotline service for those made redundant.

Cornelius König from Zurich University’s work and organisational psychology institute said it was also important to offer support for employees who keep their jobs.

“Survivor” morale dented

“It is a common assumption that the people who keep their jobs will be happy, but there is often a psychological cost for the ‘survivors’ that can result in problems with morale or creativity,” he told swissinfo.

“It is important that the people who make the decisions do not think they only affect the ten per cent negatively and then carry on as if nothing had happened – that is not the reality.”

The job market for the Swiss finance industry has certainly slowed as employers take their time choosing candidates and people with jobs decide to stay put, according to recruitment firm Robert Walters, which specialises in executive placements in the financial, tax and legal sectors.

Prospects remain

But Swiss manager Guy de Brabois told swissinfo that investment bankers and traders could find employment again by retraining for different positions.

“There are still some strong areas for recruitment, such as risk management, compliance and credit risk. Private banking has not yet shown signs of decline while retail banking is still strong,” he said.

“We are confident that the Swiss market has strong potential, particularly as many multinational companies are coming to Switzerland.”

swissinfo, Matthew Allen in Zurich

In brief

At the end of 2007, banks employed around 108,000 people in Switzerland, according to Swiss Bankers Association figures.

This is the highest level since 2000 and represents some 2.5% of the country’s entire workforce.

Some 40% of these staff were employed by the two big banks: UBS and Credit Suisse.

The banking sector contributed some SFr48 billion ($41 billion) to the Swiss economy in 2006 (latest figures) – representing around 8.5% of Swiss gross domestic product (GDP).

The sector contributed some 12% of all taxes to the Swiss coffers.