UBS says Credit Suisse merger to cause 3,000 Swiss job cuts

ZURICH: Banking giant UBS said Thursday that its merger with former rival Credit Suisse and full absorbtion of its Swiss unit would cause 3,000 job cuts in Switzerland in the coming years.

“Around 1,000 redundancies will result from the integration of Credit Suisse Schweiz,” UBS chief executive Sergio Ermotti said in a conference call with analysts, adding the overall restructuring was “expected to lead to about 2,000 additional redundancies in Switzerland over the next couple of years”.

Banking giant UBS said Thursday it would fully absorb the Swiss unit of its recently swallowed rival Credit Suisse into its operations.

Switzerland’s largest bank, which was strongarmed into a $3.25-billion takeover of its closest domestic rival in March to keep it from going under, said it aimed to complete most of the integration by the end of 2026, and was eying more than $10 billion in cost savings by then.

“Two and a half months since closing the Credit Suisse acquisition, we are wasting no time in delivering value for all our stakeholders from one of the biggest and most complex bank mergers in history,” UBS chief executive said.

The announcement came as UBS posted its second-quarter income statement, presenting its first results since the mega-merger that rocked Swiss banking was finalised in June.

The results were strong for UBS, which posted a towering net profit of $29.2 billion. Credit Suisse took a $10.1 billion loss over the same period.

Credit Suisse had been plagued by scandals prior to the takeover, which was precipitated by fears that a crisis in regional US banks would cross the Atlantic.

Investors and employees alike have been eager for any clues as to the fate of Credit Suisse’s Swiss division, with questions over whether it could continue to operate independently due to the significant overlap with UBS’s business in Switzerland. The answer was no.

“Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy,” Ermotti said.

“Our goal is to make the transition for clients as smooth as possible,” he said.

“The two Swiss entities will operate separately until their planned legal integration for 2024 with the gradual migration of clients onto UBS systems expected to be completed in 2025.”

UBS did not immediately indicate what level of job cuts its preferred option could entail, but they could be significant.

The combined banks jointly counted around 120,000 staff worldwide at the end of 2022, including 37,000 in Switzerland.

Credit Suisse suffers $10 bn loss

Even before the results were released, it was obvious the merger combined two banks pulling in diametrically different directions.

While Credit Suisse in recent years has been racking up towering losses, posting a massive 7.3-billion Swiss franc ($8.3 billion) net loss in 2022, UBS posted a $7.6 billion net profit.

And Thursday’s announcement showed that Credit Suisse’s woes had continued to pile up, with the former second largest bank in Switzerland had suffered a pre-tax loss of 8.9 billion Swiss francs ($10.1 billion) in the quarter.

UBS meanwhile has continued to project strength, announcing earlier this month that it does not need the billions in support offered by the Swiss government and the central bank to go through with the takeover.