UBS axes 3,000 jobs as it makes record profits following rescue of Credit Suisse
Fears for thousands of City jobs have intensified as UBS revealed the first tranche of cuts following its rescue of embattled Credit Suisse.
UBS said 3,000 jobs would go in its home country of Switzerland alone. That is likely to be just the start of cuts to a workforce numbering 120,000 globally across centres from London to New York.
UBS is targeting £8billion in savings following the takeover deal. Analysts have estimated that between 30,000 and 35,000 jobs could go.
Credit Suisse has already seen an exodus over the first half of the year with 8,000 departing.
UBS declined to comment beyond its announcement on jobs in Switzerland.
Job cuts: UBS said 3,000 jobs would go in its home country of Switzerland alone. That is likely to be just the start of cuts to a workforce numbering 120,000 globally
That will prolong the uncertainty for staff in the UK, where UBS employs 6,200 people in cities including London, Birmingham and Manchester.
Credit Suisse employed 5,500 people in the UK prior to the merger.
UBS snapped up its erstwhile rival in a cut-price £2.7billion deal hatched with the support of Swiss authorities, staving off a major collapse after panicked customers pulled tens of billions from scandal-hit Credit Suisse.
The takeover was agreed in March and completed in June. Results published yesterday by UBS, the first since the deal, showed a record-breaking profit of £23billion for the second quarter but that was almost all thanks to an accounting quirk reflecting how the cost of acquiring Credit Suisse was far below its value.
Stripping out that gain, the bank reported a much more modest £870,000 bottom line.
Separate results from Credit Suisse showed it continued to see an exodus of deposits, with outflows of £35billion in the quarter, though UBS said the trend reversed in June.
UBS also yesterday set out plans to absorb the Swiss arm of Credit Suisse despite arguments that spinning it off would reduce risks and be better for jobs and competition.
Chief executive Sergio Ermotti said: ‘Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy.’
The Credit Suisse brand will disappear when the UBS completes the transfer of customers to its system in 2025.
Investors welcomed the update, sending shares nearly 6 per cent higher. But analysts at Jefferies cautioned that integration would be ‘long, challenging and likely bumpy’.
Victoria Scholar, head of investment at Interactive Investor, said Ermotti faced ‘cut-throat decisions… with the daunting challenge of trying to balance the need to retain key staff while carrying out major job cuts’.