UBS has initiated a $10bn cost-cutting plan that will lead to the axing of more than 3,000 jobs as part of a major overhaul of the Swiss bank’s operations following its emergency takeover of Credit Suisse earlier this year.
The layoffs amount to around 8% of the staff employed by the combined groups in Switzerland and were announced on Thursday during the banking giant’s quarterly presentation call.
During the call, Sergio Ermotti, UBS Group CEO, said the staff layoffs would take place ‘over a couple of years’ and that the cuts were ‘unavoidable’. The Swiss bank, which employs more than 122,000 globally, expects more staff to leave, for example through retirement, reports said. The number of layoffs could be far higher as Credit Suisse has already revealed that 8,000 had stopped working at the bank in the past few months.
The UBS-Credit Suisse merger has also caused concern among the combined firm’s wealthy clients, a crucial segment UBS wants to hold onto. Credit Suisse reported net asset outflows of $44bn while UBS’s global wealth management division saw its net new money flows slow from almost $28bn in the first quarter to $16bn in the second quarter.
Profit record
UBS also reported record profits of $29bn for the second quarter – the largest ever reported by a bank. The massive profits were almost entirely due to a huge one-off gain from acquiring Credit Suisse at a cut price of $3.8bn, far lower than the bank’s balance sheet is truly worth. Excluding the Credit Suisse gain, UBS posted profits of $1.1bn for the second quarter, according to reports.
The $10bn cost reduction plan, which is set to be completed by 2026, follows UBS’s decision to fully absorb Credit Suisse’s banking operations in Switzerland.
‘Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders, and the Swiss economy,’ said Ermotti.
‘Our goal is to make the transition for clients as smooth as possible. 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. Nothing will therefore change for clients in the foreseeable future.’
