Dive Brief:
- UBS will cut around 3,000 jobs in Switzerland and save $10 billion while it absorbs former rival Credit Suisse, Reuters and Bloomberg reported Thursday.
- UBS plans to shutter nearly two-thirds of Credit Suisse’s investment bank, including almost all of its trading operations, according to Bloomberg.
- As part of the restructuring, UBS will fully integrate Credit Suisse’s domestic bank while the two banks continue operating separately until next year. The Credit Suisse brand and operations will stay put until clients are migrated to the UBS system, likely in 2025, according to UBS’s second-quarter earnings report.
Dive Insight:
UBS reported a $29 billion profit before tax in the second quarter, a total that includes results for the former Credit Suisse business from June 1. UBS saw a pickup in wealth activity, which executives took as an indication that trust in the lender remains, despite recent turmoil.
UBS will terminate 1,000 positions in the domestic market due to overlaps in the banking businesses, while an additional 2,000 roles will be culled in Switzerland in group functions, Bloomberg reported. The transaction increased UBS’s headcount to nearly 120,000, which the lender plans to eventually reduce by roughly 30%, according to the publication.
Around half of the $10 billion cost savings by 2026 will stem from restructuring the investment bank and winding down non-core assets, UBS CEO Sergio Ermotti noted.
Ermotti said the lender made the decision on Credit Suisse after thoroughly evaluating all the available options.
“Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy. Clients will continue to receive the premium level of service they expect, benefiting from enhanced offerings, expert capabilities and global reach,” Ermotti said. “Our stronger capital base will enable us to keep the combined lending exposures unchanged, while maintaining our risk discipline.”
UBS plans to achieve a cost-to-income ratio of less than 70% by the end of 2026 — a process that would involve a complex migration process of Credit Suisse clients, assets and infrastructure.
“UBS’s results bring two key data points signaling a successful acquisition of Credit Suisse, a stabilizing wealth unit, and the decision to retain and integrate the domestic Swiss unit enabling the bank to capitalize on its increased scale and competitive leadership in its domestic market,” Alison Williams, Bloomberg Intelligence senior industry analyst said, according to the publication.
In March, UBS agreed to buy Credit Suisse for roughly $3.25 billion in a hastily arranged government-backed deal.
