UBS will cut 3,000 jobs in Switzerland as it absorbs Credit Suisse

London
CNN
—

UBS expects to cut about 3,000 jobs in Switzerland to help it cut costs by $10 billion as it undertakes an overhaul in the wake of its bankruptcy. Emergency ambulance from Credit Suisse earlier this year.

The job cuts amount to approximately 8% of employees working in the company’s joint Swiss operations Global banking giant It may spark new controversy in the country, as the deal has already proven unpopular with the public and some politicians.

“The Association of Swiss Bankers demands that the 37,000 employees of the two institutions in Switzerland be treated fairly and equally in the integration process,” the Swiss Banking Federation said in a statement on Thursday.

On a call with analysts, UBS CEO Sergio Ermotti said: “Every job loss is painful for us. Unfortunately, in this case, the cuts were unavoidable.”

Ermotti said the job cuts would be spread “over two years” and that the bank would provide affected employees with financial support, outplacement services and retraining opportunities.

The bank’s workforce is approximately 122,000 employees worldwide. It did not provide any further details on the numbers of potential layoffs outside Switzerland in its earnings statement – the first report since it acquired its rival.

About 8,000 employees at Credit Suisse have already left voluntarily in the first half of the year, with about half of that attrition occurring in the United States and the Asia-Pacific region and 10% in Switzerland, UBS CFO Todd Tockner told reporters.

Ermoti said the bank expected more staff to resign or retire, but jobs still needed to be cut outside Switzerland to meet its savings targets. UPS (UPS) also plans to reduce its reliance on outside contractors.

Victoria Scholar, chief investment officer at Interactive Investor, an online platform, said the bank faced “the daunting challenge of trying to balance the need to retain key staff while simultaneously making significant job cuts”.

UPS too Firm plans to retain the banking operations of Credit Suisse in Switzerland, and absorb those operations entirely into the newly combined group, rather than opting for a subsidiary operation or an initial public offering, although this It would have resulted in 400 fewer layoffs.

“Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy,” Ermotti said in a statement. He added that this was “one of the largest and most complex bank mergers in history.”

UBS said it expects savings of more than $10 billion from integration by the end of 2026 – $1 billion More than a year earlier than planned when the acquisition was announced in March. Shares of the bank rose as much as 7% after the news on Thursday, and are up 35% so far this year.

UBS reported net profit of $29 billion for the second quarter, reflecting a one-off payment from the acquisition of Credit Suisse for a fraction of its value. But it also benefited from strong inflows into its global wealth management business, recording $16 billion in net new funds – the highest number in the second quarter in more than a decade.

UBS agreed on March 19 to buy Credit Suisse for 3 billion Swiss francs ($3.4 billion) in a rescue organized by Swiss authorities to avert a financial crisis. Collapse of the banking sector.

controversy in Switzerland

Credit Suisse bankruptcy after confidence in the ailing bank collapsed and customers withdrew their money. The company has been plagued by scandals and compliance failures in recent years that have wiped out its profits and lost customers.

But the knock-on came after it admitted “material weakness” in its bookkeeping, and as the demise of US regional lenders Silicon Valley Bank and Signature Bank spread fear about weaker institutions.

the A combination of Two Swiss Banks sparked controversy Because it leaves Switzerland exposed to one huge financial institution with a market share of around 30% and assets roughly twice the size of the country’s annual economic output.

Taxpayers were already on the hook over potential losses from the deal, but UBS said earlier this month that it would no longer require a Swiss government guarantee of 9 billion francs ($10.3 billion) for potential future losses arising from Credit Suisse’s assets. .

It also said it no longer needed a government-backed loan of 100 billion francs ($114.2 billion) and that Credit Suisse had repaid an earlier loan from the Swiss central bank of 50 billion francs ($57.1 billion).

The Swiss government said at the time: “Taxpayers will no longer bear any risks arising from these guarantees.”

UBS and Credit Suisse will continue to operate under separate brands until at least the end of 2024, according to Ermotti. “Nothing will change for customers in the foreseeable future,” he said, adding that he did not “selectively” rule out using the Credit Suisse brand even after banks had done so. merged.