Champagne goes flat as bankers' bloodbath begins

DESPITE the talk of a return to an Eighties-style boom, the champagne in the bars around two of the City of London's biggest banks has a decidedly flat taste this week.

Over the next few days, 3,000 workers at UBS and SBC, two leading Swiss banks, are expected to be made redundant following their pounds 15bn merger. The sackings are expected to start on Thursday or Friday.

Morale is particularly low at UBS, which is widely expected to bear the brunt of the cuts. UBS employees, many of whom earn more than pounds 100,000 a year, variously described the working atmosphere yesterday as "grim", "appalling" and "frustrating".

"It's what you'd expect really, pretty bad," said one down-hearted employee, drowning his sorrows with a glass or two of Chablis in a local wine bar.

Some commentators reckon as few as one in 10 UBS employees will remain with the bank after the redundancies, although the exact number of job cuts is unlikely to be known before the end of next week. Between them, the two banks employ about 7,000 people in London.

The handling of the redundancy programme has created bitterness and resentment among UBS employees, many of whom believe they have been the subject of discrimination.

At the time of the merger announcement, Marcel Ospel, SBC's chief executive and chief executive-designate of the new bank, told UBS employees he would pick the best staff from the two banks to serve under him in the new company.

However, UBS managers have lost out in the race for top jobs, and numerous, highly rated UBS employees are expected to be issued with their P45s in the coming weeks.

One employee said: "Frankly, I think its outrageous. UBS has some great businesses. I think it's very sad that some of these will not be taken into the new bank".

Despite the uncertainty over their future, there has been no mass defection of staff from the banks since the merger was announced in December. "People are hanging on for their redundancy cheques and their bonuses," said one UBS source yesterday.

One leading City head-hunter yesterday confirmed that his firm had had inquiries from numerous UBS employees and had managed to place several of them. However, not all staff can expect to be so fortunate.

Ron Bradley, managing director of Jonathan Wren search and selection, said yesterday that experienced front-office staff should have little difficulty getting another job. "However, back-office staff, particularly those in clerical roles, could well find it difficult," he added.

Although redundancy terms are yet to be finalised, proposals have been circulated to staff at both banks. SBC employees are expected to receive a minimum of three months' pay, plus an extra month for each year of service. An analyst who has been at the bank three years and earns pounds 100,000, for example, stands to net pounds 50,000. Redundancy terms at UBS are understood to be similar, although over-40s are likely to receive slightly better terms.

One well-paid banker said yesterday: "I think the terms are rather acceptable. I shall be quite disappointed if I don't get made redundant now."

Bonuses provide staff with another incentive to tough it out until the bitter end. UBS staff have already been provided with details of their annual bonuses - described by one insider as "pretty good" - but these will be forfeited if employees quit of their own accord before the end of the month. SBC staff will not be told what their annual bonuses will be until next month.

Most employees have a reasonable idea of who will be staying and who will be going. Key employees have already been offered jobs in the new bank, and many of the staff who have yet to receive an offer believe they will be looking for another employer in the weeks to come.

Uncertainty over the unit's future is understood to have hit business at key departments at UBS. "Staff in some areas are simply sitting there with nothing to do," said one source.

Another said: "Put it this way, if you want to take a long lunch or go and chat to some headhunters, nobody will make a fuss. Things are pretty quiet".