UBS Announces $10 Billion Cost Savings and Staff Reductions

Introduction

Swiss banking giant UBS has revealed plans to save $10 billion in costs, including cutting 3,000 staff in Switzerland. This move comes as UBS integrates Credit Suisse’s operations following a government-orchestrated merger.

Earnings Report

UBS reported $29 billion in net and pre-tax profit for the second quarter. Underlying profit before taxes was $1.1 billion, excluding negative goodwill and integration costs related to the takeover of Credit Suisse.

Credit Suisse Loss

Credit Suisse, now a subsidiary of UBS, announced a loss of 8.9 billion Swiss francs ($10.1 billion) for the entirety of 2023.

Staff Reductions

UBS CEO Sergio Ermotti stated that around 3,000 jobs will be eliminated, but not until late next year. The majority of cost reductions will come from natural attrition, retirements, and internal mobility. Additionally, about 2,000 more redundancies are expected in Switzerland due to the restructuring of other parts of Credit Suisse.

Reasons for Integration

Ermotti defended the decision to keep Credit Suisse’s domestic operations, citing the complexity of separating them from the global bank, technology issues, and other factors.

Integration Timeline

UBS plans to complete the integration of Credit Suisse’s operations by the end of 2026. They aim to achieve gross cost reductions of over $10 billion during this time.

Positive Momentum

UBS saw significant deposit growth in the quarter, with $23 billion flowing in, including $18 billion to the wealth-management and Swiss bank operations of Credit Suisse.

Investor Response

Investors have responded positively to UBS’s handling of the deal. UBS shares on the Swiss SIX stock exchange have risen about 35% this year, including a 5% gain following the quarterly report.

Future Plans

The two banks will continue to operate separately until a legal merger next year. The Credit Suisse brand will remain until client migration to UBS’s system is completed in 2025.