UBS Group embarked on a sweeping plan to cut more than $10 billion in costs, saying on Thursday it will axe 3,000 jobs in Switzerland alone after it took over its stricken rival Credit Suisse.
The plan to cut roughly one in 12 Swiss jobs gives a glimpse of the scale of shake-up at the newly forged banking giant, as it grapples with the task of swallowing a competitor that unravelled after panicked customers withdrew tens of billions.
The initial round of job cuts follows a decision by the globe’s biggest wealth manager to absorb Credit Suisse’s local arm — a solid profit-maker that last year was the only Credit Suisse division in the black — rather than spin it off, which UBS had also considered.
“Our analysis clearly shows that a full integration is the best outcome for UBS … and the Swiss economy,” Chief Executive Sergio Ermotti said.
He wrote in a memo to staff that 3,000 Swiss jobs would go, while more people would leave of their own accord, for example, through retirement. Globally, 8,000 Credit Suisse have already left over the first half of the year.
The prediction of over $10 billion in cost-savings by end 2026 compares with an earlier estimate of $8 billion by 2027.
The news lifted UBS shares, which were up more than 5 per cent in early afternoon trade, hitting highs not seen since 2008, after the cuts were announced alongside the first financial results UBS published since the takeover, hastily arranged over one March weekend. UBS also struck an optimistic note about its short-term outlook. The lender is seeing a pick up in sentiment among its rich clients and expects stronger financial markets to also boost the fees it earns, it said.
The decision to absorb Credit Suisse’s local operation is, however, contested in Switzerland. Proxy adviser Ethos, representing Swiss pension funds and foundations that owned stakes in both banks, said spinning off the Swiss bank instead would have avoided “a major systemic risk for Switzerland, an important negative impact on employment and issues for the fair competition”.
Ethos has backed a class-action lawsuit seeking a better price from UBS for the takeover.
With Credit Suisse in Switzerland intact and independent, as some politicians had hoped, fewer jobs would have been threatened.
