GENEVA (AP) — Swiss banking giant UBS on Thursday announced plans to save $10 billion in costs, including through 3,000 staff reductions in Switzerland in the coming years, as it moves ahead with “full integration” of longtime rival Credit Suisse’s domestic operations following a takeover.
The announcement came as the Zurich-based bank reported $29 billion in net and pre-tax profit in the second quarter, its first earnings release since the government-orchestrated merger to help stave off a possible global financial meltdown.
Underlying profit before taxes came in at $1.1 billion, which excludes some $29 billion in negative goodwill, integration costs and other impacts of the takeover. Goodwill is an accounting technique, and the figure stems from the difference between the $3.25 billion that UBS paid for Credit Suisse and the underlying value of its assets.
In a separate statement, Credit Suisse, calling itself a UBS subsidiary following the completion of the deal on June 12, announced a loss of 8.9 billion Swiss francs ($10.1 billion) as it wrapped up its accounting for all of 2023.
In a conference call with analysts, UBS chief executive Sergio Ermotti addressed one of the major outstanding questions: how many of Credit Suisse’s tens of thousands of employees would be retained. He said about 3,000 jobs would be eliminated, but not before late next year. He pointed to “a quite healthy Swiss job market” — including in finance.
“Let me emphasize, the vast majority of the cost reductions will come from natural attrition, retirements and internal mobility. Around 1,000 redundancies will result from the integration of Credit Suisse (Switzerland),” Ermotti said.
“In addition, the necessity to profoundly restructure other parts of Credit Suisse is expected to lead to about 2,000 additional redundancies in Switzerland over the next couple of years,” he added.
He defended and explained the hard-wrought decision for UBS to hold on to the Swiss operations of Credit Suisse instead of spinning off or otherwise divesting them, citing the complexity of unraveling the domestic business from the global bank, technology issues and other factors.
UBS said it planned to “substantially complete” the integration of Credit Suisse’s operations by the end of 2026 and to “achieve gross cost reductions of over $10 billion over that time.”
Ermotti trumpeted “formidable momentum” in deposits in the quarter, with $23 billion flowing in. It included $18 billion to the wealth-management and Swiss bank operations of Credit Suisse, which was bleeding deposits amid a crisis of investor confidence late last year and early this year that led to its demise and marriage with UBS.
Investors appear pleased with the way UBS has handled the deal. Its shares are up about 35% this year on the Swiss SIX stock exchange, including a 5% gain to 23.25 Swiss francs Thursday morning after the quarterly report.
UBS said the two banks will operate separately until a planned legal merger next year, and the Credit Suisse brand — with its storied yet recently troubled legacy in Swiss finance — would remain “until we complete the migration of clients to our system, which we expect in 2025.”