UBS to absorb Credit Suisse domestic unit, eyes 3,000 job cuts

ZURICH: Banking giant UBS said Thursday it plans to fully absorb Credit Suisse’s century-old Swiss division and slash thousands of jobs across Switzerland, as it seeks to redress its recently-swallowed rival.

Switzerland’s largest bank, which was strongarmed into a $3.25-billion takeover of its closest domestic rival in March to keep it from going under, said it aimed to complete most of the integration by the end of 2026, with more than $10 billion in cost savings by then.

“Two and a half months since closing the Credit Suisse acquisition, we are wasting no time in delivering value for all our stakeholders from one of the biggest and most complex bank mergers in history,” UBS chief executive Sergio Ermotti said. The announcement came as UBS posted its second-quarter income statement, presenting its first results since the mega-merger that rocked Swiss banking was finalised in June.

Analysts described the picture painted as positive, while investors also seemed enthused, sending UBS’s share price soaring by almost five percent to open at 23.25 Swiss francs ($26.4). The results were strong for UBS, which posted a towering net profit of $29.2 billion. Credit Suisse took a $10.1 billion loss over the same period.

Credit Suisse had been plagued by scandals prior to the takeover, which was precipitated by fears that a crisis in regional US banks would cross the Atlantic.

Investors and employees alike have been particularly eager for any clues as to the fate of Credit Suisse’s Swiss division, which was the unit that best withstood the multiple crises wracking the bank.

But questions have been rife over whether it could continue to operate independently due to the significant overlap with UBS’s business in Switzerland.

The answer was no.

“Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy,” Ermotti said. “Our goal is to make the transition for clients as smooth as possible,” he said.

“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.”

Until then at least, UBS said it would maintain all of Credit Suisse’s extensive sponsorship of sporting and other events and causes in Switzerland.