Morning Coffee: UBS implies MD departures might save it money. Expats in Dubai discover the downsides

efinancialcareers.com:

Usually, in bank mergers, the rule of thumb is that you can save about 40% of the cost base of the smaller bank.  For example, when UBS took over Credit Suisse in 2023, Sergio Ermotti might have looked at its last set of accounts (which turned out to be its last set of accounts), saw that the total expenses were about $18bn, and guessed that a bit more than $7bn would be a reasonable target.  The actual target was set at $8bn, possibly reflecting the fact that this wasn’t an ordinary deal and the overlap was obviously considerable.

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However, a year later it became apparent that this was indeed no ordinary deal. Ermotti therefore raised his target to $13bn.  And now, having achieved $7.5bn of the original target already, he’s being asked how the remaining cuts will be made.

The answer definitely involves job losses; it was always promised that half of the cost savings would come from headcount and half from other areas (mainly switching off the CS technology systems as they were integrated onto the UBS platform).  If we take a ballpark estimate of $250k per employee as the average fully loaded cost, including salary, bonus, taxes and desk cost, then half of $13bn translates to roughly 26,000 staff reductions, compared to an original combined total of 120,000 the day after the merger closed.

Since then, ten thousand employees have gone, which might imply that there are some quite savage redundancy programs yet to come.  But Ermotti seems to be hinting that things might not be quite as bad as you'd think.

As he pointed out in an interview in Davos, in any given year, 7% of UBS’ workforce leave the bank anyway.  That would mean that in an ideal world, fully half of the