The banking giant UBS has chosen to “fully integrate” Credit Suisse in Switzerland, whose brand will disappear. A total of 3,000 job cuts are planned. In March, under pressure from the Swiss authorities, UBS agreed to buy its former rival for only 3 billion Swiss francs in order to avoid bankruptcy.

After weighing several options, including a spin-off, UBS chose to “fully integrate” its rival Credit Suisse in Switzerland, whose brand will disappear, announced this Thursday, August 31, the banking giant. The bank wants to complete most of its integration by the end of 2026. It hopes by this date to save more than 10 billion dollars from this merger.

“Two and a half months after the acquisition of Credit Suisse, we are working hard to implement one of the largest and most complex bank mergers in history,” said Sergio Ermotti, the boss of UBS, quoted in the press release.

We now know the consequences of the operation on employment: 3,000 job cuts in Switzerland over the next few years, including 1,000 by the end of 2024, warned Sergio Ermotti, the boss of UBS. He insisted on the need to carry out a “deep restructuring” of the fallen bank. The announcement seems to have been well received on the markets: UBS shares jumped 5.73% in early trading to 23.43 CHF.

“Across the combined firm, we worked to stabilize the Credit Suisse core wealth, asset management and Swiss bank franchises while also demonstrating unwavering commitment to our clients.”
Hear more from UBS CEO Sergio P. Ermotti on our second quarter results video. pic.twitter.com/hZFXImQ7uK

— UBS (@UBS) August 31, 2023

In fact, the integration of Credit Suisse implies a reorganization of the branch which brings together retail banking, mortgage loans and loans to national companies in Switzerland. Considered a nugget, this branch was the one that held up best in 2022 when Credit Suisse suffered massive capital withdrawals. Its turnover had indeed only fallen by 5% in 2022, against a drop of 54% in income in investment banking and 30% in wealth management. But the many duplicates between the hundreds of Credit Suisse branches and the 200 of UBS across the country will lead to major staff cuts.

Credit Suisse will also begin to entrust part of its business in its market activities within the investment bank to UBS, which absorbed it in June. In practice, UBS and Credit Suisse will continue to operate separately in Switzerland until their planned merger in 2024. Both brands will continue until clients migrate to UBS‘s systems in 2025.

Net profit

UBS also announced on Thursday that it had made a net profit of $29 billion in the second quarter of 2023, thanks to the acquisition of Credit Suisse. The latter suffered a heavy loss of 8.9 billion Swiss francs, before tax, due to the collapse of part of its activities, linked to uncertainties about its future after its takeover by UBS in March of this year, according to the statement issued Thursday by UBS.

As a reminder, at the end of March, UBS agreed to buy out its ex-rival under duress from the Swiss authorities to avoid its bankruptcy and finalized the merger in June. The bank then left the summer to go through the accounts of its ex-rival and make decisions.

In total, the two banks together employed around 120,000 people worldwide at the end of 2022, including 37,000 in Switzerland. But departures have multiplied since the announcement of the merger. UBS began to pay the piper for Credit Suisse by agreeing in July to pay the US central bank and the Bank of England a fine of 387 million dollars for the mismanagement of the US fund Archegos.

In mid-August, UBS had however reassured by announcing that it was renouncing the support measures of the State and the Swiss central bank, considering that they were no longer necessary. This takeover under duress diametrically changes the fate of UBS, which in 2022 had generated a copious net profit of 7.6 billion dollars, one of its best results since the financial crisis of 2008, against a colossal loss of 7.3 billion francs