Vawch Blog

UBS and Credit Suisse

December 8th, 2008 in News, Random musings

The knife just keeps cutting deeper . . .

UBS is reported to cut another 4,500 jobs. Most of which I believe will come from its investment banking business. To my knowledge, its Singapore’s operation has already announced at least two rounds of cuts already (my guess is probably 3 or 4).

Its other European competitor, Credit Suisse also announced redundancies of 5,300 last week. A significant proportion of this again coming from its investment banking division. Its Singapore operations are about 40 strong and will be going through its fourth round of cuts.

It really is shocking how quickly things have turned bad. I am personally of the opinion that the banks, at least for parts of its business, is overreacting.

After the 2001/2 recession and by 2004, Merrill Lynch’s IBD team in Singapore had reduced its headcount to a total of only 6 FTEs (1 MD, 1 Director, 2 Associates and 2 Analysts)! By 2005/6 that number had quickly doubled and then tripled . . .

From a strategic standpoint, I think this downturn is an massive opportunity for firms to leapfrog or give a dehabilitating blow to its competitors. CEOs are paid top dollar to lead companies, it is quite disappointing that many of them aren’t leading their organizations but merely following the “herd instinct” and making deep headcount reductions. I’m not suggesting that capacities at firms shouldn’t be reviewed and appropriately cut, but if only some leaders would cease this opportunity to review their business models and think of something creative.