UBS dramatically increased the cost cuts it expects to make from merging with Credit Suisse today, increasing fears that City job losses will be even worse than first planned.
The controversial deal to merge the two and prevent Credit Suisse from going under was brokered by the Swiss government last year after losses at the CS investment banking arm.
UBS said today it is aiming for cost savings of $13 billion, up from the $10 billion previously expected.
Thousands of City jobs will go. Credit Suisse has -- or had -- 5000 UK staff mostly at Canary Wharf while UBS has 6000 mostly at Broadgate in the City. It is understood that staff are in talks on redundancy terms.
Across the City bankers are nervous for their jobs as a dearth of deal making and new stock flotations hit revenues.
One estimate last week predicted there were 60,000 job cuts across world banking in 2023, making it one of the worst years since the 2008 financial crash.
Yesterday CMC Markets said 200 jobs would go – 17% of its total headcount.
UBS CEO Sergio Ermotti didn’t address the job cuts directly today, but said: "2023 was a defining year in UBS's history....as we move to the next phase of our journey, we will focus on restructuring and optimising the combined businesses."
Globally, UBS said it has cut headcount by more than 3000 in the last quarter. It said the merger of UBS and Credit Suisse should be completed by the end of the second quarter of 2024.
Ermotti added: "While our progress over the next three years will not be measured in a straight line, our strategy is clear. With enhanced scale and capabilities across our leading client franchises and improved resource discipline, we will drive sustainable long-term growth and higher returns."
UBS fell to a loss of $279 million (£222 million) in the final quarter of last year as it began the "first phase" of integration with Credit Suisse.
Group revenues fell from $11.7 billion to $10.9 billion. But there was an annual profit of $30 billion, largely an accounting gain following the Credit Suisse takeover.
UBS shares fell nearly 3% to 24.95 CHF (Swiss Francs).
To placate investors, UBS said today it will buy back up to $1 billion of shares and reinstate a dividend in May.
Ermotti plans that the cost savings will come quickly. He told CNBC: “We are merging in the first half of the year our two parent companies, we are merging the U.S. operation, we are merging the Swiss operations, and this will allow us then to start to realise the synergies.”
UBS plans to boost the assets at its wealth management arm from $3.8 trillion to $5 trillion by 2028.
Credit Suisse had been at the heart of some of the worst banking scandals of recent years, including the collapses of Archegos Capital and and Greensill Capital.
Saudi National Bank, the biggest shareholder with 10%, declined to increase its stake, effectively sealing Credit Suisse’s fate.
Banking remains vital to the Swiss economy and the merger of the two biggest players was political socially and politically.
Ermotti added: "With enhanced scale and capabilities across our leading client franchises and improved resource discipline, we will drive sustainable long-term growth and higher returns.”
