The Swiss banking giant UBS is going to do away with the more than 100-year-old Credit Suisse brand and cut some 3,000 jobs in Switzerland to straighten out its ex-rival, which is in very bad shape and which it was forced to buy. After weighing several options, including that of a spin-off, UBS has decided to fully integrate the Swiss branch of Credit Suisse, which combines its Swiss retail banking, mortgage loans and corporate loans, the bank announced on Thursday during publication of its second quarter results.
This decision for a division considered to be the best activity of Credit Suisse will lead to the elimination of “1,000 positions” in Switzerland by the end of 2024, indicated Sergio Ermotti, the boss of UBS, during a conference with the financial analysts. There will be 2,000 additional job cuts in the coming years, given the need to carry out a “deep restructuring” of Credit Suisse’s activities, he stressed, painting the image of a fragile bank including in the Alpine country.
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. The merger was finalized in June and the group has since conducted an in-depth analysis of Credit Suisse which confirmed that its business was “deeply flawed” and that the bank was no longer able to survive “on its own”, it said. added the boss of UBS. The acquiring group has set itself the goal of completing the bulk of the Credit Suisse integration by the end of 2026. It is one of the “largest and most complex bank mergers in history” , noted Mr. Ermotti. The banking giant hopes to achieve more than 10 billion dollars in savings by this date through this merger.
The absorption of the Swiss branch of Credit Suisse is one of the first major consequences of this mega-merger. This is one of the toughest decisions UBS has had to make in the run-up to elections in Switzerland in October, given the implications for jobs. According to the boss of UBS, however, it is the “best solution”.
The Swiss branch of Credit Suisse would have struggled to find its place in the banking landscape of the Alpine country if it had been split, he assured, while insisting that UBS had weighed up to seven scenarios. This decision is a good outcome, but “it remains a very sad day for Credit Suisse employees who have shown great loyalty,” Claudine Esseiva, spokesperson for the Swiss Association, told AFP. bank employees (Aseb).
In total, the two banks together employed around 120,000 employees worldwide at the end of 2022, including 37,000 in Switzerland, even if departures have multiplied since the announcement of their merger. Mr. Ermotti assured that everything would be done to help employees find work, in a Switzerland where the workforce is sorely lacking. The markets have welcomed this decision, the share price of UBS jumping 4.96% at 0750 GMT, to 23.26 Swiss francs. 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.
The Swiss branch of Credit Suisse is the one that resisted the best in 2022 when the bank suffered massive withdrawals of capital. Its turnover had only fallen by 5% during the 2022 financial year, against a drop of 54% in income in investment banking and 30% in wealth management. But the many duplicates between the hundred branches of Credit Suisse and the 200 of UBS across the country forced UBS to make a choice. In the second quarter, the first bank of Switzerland earned a net profit of 29.2 billion dollars, without comparison with that of 2.1 billion dollars generated in the second quarter of 2022, due to numerous exceptional items resulting from this merger.
Credit Suisse, for its part, suffered a pre-tax loss of 8.9 billion Swiss francs (9.2 billion euros) in the second quarter. Its wealth management division continued to suffer from outflows in the quarter, but withdrawals slowed, with the balance turning “positive” again thanks to new inflows of money in June, the statement said.
