UBS to cut 3,000 staff in Switzerland as it integrates rival

UBS announced on Thursday that it will keep Credit Suisse’s Swiss unit, adding a big operation where the two lenders have substantial overlap. © Keystone / Michael Buholzer

UBS Group AG plans to eliminate about 3,000 jobs in its home market as it seeks to cut billions of dollars in costs after buying rival Credit Suisse.

It’s the first time Chief Executive Officer Sergio Ermotti has put a concrete figure on how many jobs the massive merger will cost, though the forced redundancies he disclosed on an analysts call on Thursday are likely only a small part of the total reduction in headcount. The acquisition of Credit Suisse increased UBS’s workforce by 45,000 to currently just under 120,000.

UBS has previously said it wants to slash staff costs by about $6 billion ($5.27 billion)  over the next several years, effectively accounting for more than half of Ermotti’s promise to slash costs by more than $10 billion.

UBS announced on Thursday that it will keep Credit Suisse’s Swiss unit, adding a big operation where the two lenders have substantial overlap. The decision came after UBS earlier this month gave up extensive guarantees given by the Swiss government in March to sweeten the takeover.

UBS to keep Credit Suisse’s Swiss business, retire its brand

UBS and Credit Suisse will continue to operate separately in the country until their legal merger next year, UBS said in a statement Thursday. The lender will keep using the Credit Suisse brand and operations until it has moved the former rival’s clients onto its own systems, which is expected to happen in 2025, it said.

The decision “follows a thorough evaluation of all options,” Chief Executive Officer Sergio Ermotti said in the statement. “Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy.”

The Swiss business has been Credit Suisse’s crown jewel, a profitable anchor while the rest of the firm lurched from crisis to crisis over the past years. UBS had long signaled its preference to keep it, but political concerns about its potentially dominant role at home had complicated the decision. The decision to integrate it was made easier after UBS voluntarily gave up a safety net provided by the government.

Bloomberg previously reported that UBS was poised to integrate the Swiss bank and planned to wind down the Credit Suisse brand in the country.

The combination of UBS and Credit Suisse creates a domestic giant in Switzerland, with analysts at Citigroup previously estimating that the new bank would account for about 35% of domestic deposits, 31% of corporate loans and 26% of mortgages. It will compete with banks such as Raiffeisen and ZKB, a cantonal lender, as well as more than 200 other firms.

“Competition in the Swiss market remains robust across all our business activities,” UBS said in the release Thursday. “The cantonal banks in aggregate will continue to have the highest market share in all relevant personal and commercial banking products.”

Analysts have pointed out that Credit Suisse’s local business, the Swiss Universal Bank, is probably worth a multiple of the price UBS paid for the whole of its stricken rival. The bank was the leader in Swiss domestic investment-banking activity in terms of deal value for at least a decade.

UBS seeing inflows across units in third quarter, CEO Ermotti Says

Additionally, UBS has seen inflows both in its own franchise and at Credit Suisse over the past two months, as clients return following the completion of the takeover in June.

“Already in the second quarter at Credit Suisse — although April and May were negative — in June they saw positive inflows, after the closing,” Chief Executive Officer Sergio Ermotti said in an interview on Bloomberg TV. “As we speak, in the third quarter, we see inflows on both platforms, not only in wealth management but also in the Swiss bank.”

Winning back clients that had deserted Credit Suisse over the past year is key as UBS moves ahead with the integration of its former rival. The Swiss firm on Thursday posted the biggest-ever quarterly profit for a bank in the second quarter and said it would fully integrate Credit Suisse’s domestic bank.

UBS’s own wealth management business saw $16 billion of inflows in the three months through June, the best second quarter in more than a decade. At Credit Suisse’s wealth unit, clients pulled $30 billion.

Flows this quarter have been positive so far, with $1 billion in net new money returning to Credit Suisse’s wealth unit through Aug. 28, and $7 billion to UBS’s wealth management. Clients also added $10 billion in deposits to Credit Suisse’s wealth unit, and 4 billion francs to its Swiss bank.

“We are counting on taking back as much as possible of the 200 billion that we lost in the last few quarters,” Ermotti said.

©2023 Bloomberg L.P.