UBS is on course to cutting as many as 3,000 jobs in Switzerland as it attempts to cut costs to the tune of $10 billion over the next several years. The cost cut affects around 8 percent of the combined staff strength of UBS and Credit Suisse in Switzerland.
UBS bought crisis-hit Credit Suisse for $3.4 billion earlier this year, as part of a rescue deal for Credit Suisse orchestrated by Swiss authorities. The two banks have a total of 37,000 employees in Switzerland. The combined global work force of the two banks is nearly 122,000.
In May UBS said it took a financial hit of $17 billion due to the takeover of Credit Suisse. The financial loss included $13 billion from fair value adjustments of assets and liabilities and $4 billion spent on litigation and regulatory costs.
"Every lost job is painful for us. Unfortunately, in this situation, cuts were unavoidable," said UBS CEO Sergio Ermotti. The CEO added that the job cuts would be spread over a couple of years.
Meanwhile, the Swiss Bank Employees Association expressed displeasure over the looming layoffs at the banking giant. "The Swiss Bank Employees Association demands that the 37,000 employees of the two institutions in Switzerland are treated fairly and equally in the integration process," the union said in a statement.
The UBS chief also said the bank will go ahead with the full integration of the Credit Suisse banking operations into UBS in Switzerland, rather than go for a spin-off or IPO. "Our analysis clearly shows that a full integration is the best outcome for UBS, our stakeholders and the Swiss economy," Ermotti said, according to CNN.
Huge Second Quarter Profit
UBS aims to save more than $10 billion in savings through the integration through 2026. UBS shares rose as much as 7 percent after it unveiled the cost cutting plans.
Separately, UBS reported net profit of $29 billion for the second quarter. This was way higher than the $12.8 billion projected by analysts, according to a Reuters poll. The huge jump in profits reflected $28.93 billion in negative goodwill on the Credit Suisse acquisition, UBS said. However, underlying profit before tax stood at $1.1 billion.