Credit Suisse to lay off more than 40 employees in China securities unit

HONG KONG: Credit Suisse is set to launch a new round of layoffs which may impact more than 40 employees in one of its China units, two people with direct knowledge of the matter said, as the now subsidiary of former Swiss rival UBS cut costs following its takeover last month.

Credit Suisse Securities (China), 51%-owned by Credit Suisse, is expected to start the cuts, accounting for about 20% of its local workforce, as early as Monday, according to the sources.

Staff in wealth management and investment banking divisions will take the biggest hit, the sources said, who declined to be identified as they were not authorized to speak to media.

Up to 100 employees at the local unit - which had 234 staff as of the end of last year – could eventually be laid off by year-end if the cost control exercise continues, according to one of the two sources.

Credit Suisse, Credit Suisse Securities and UBS declined to comment.

The move is aimed at further tightening spending at the joint venture as Credit Suisse “seeks to stem losses”, said one of the sources.

The joint venture booked a net loss of 254.5 million yuan ($35.27 million) in 2022, its annual report showed.

Out of the 200-strong team at the local unit, 58 were in investment banking and 36 in wealth management related businesses as of end-2022.

The job cuts also come as Credit Suisse and its joint venture partner Founder Securities put the unit up for sale and engaged with potential buyers such as Citi, Reuters reported last month.

UBS plans to offload the holding after the merger as it is bound by Chinese regulations to have control in no more than one securities joint ventures, sources told Reuters then.

UBS already has a 67%-owned profitable joint venture in China.

Before UBS had to rescue its crosstown crisis-hit rival earlier this year, Credit Suisse had launched layoffs in November last year as it struggled to cope with a slowing dealmaking and trading business, Reuters reported.

At the time it axed about one-third of its China-based investment banking team and nearly half of its research department, all of whom were employed by the joint venture.