UBS Group outlined major targets for its integration of former rival Credit Suisse, including 3,000 domestic job cuts and more than $10 billion in cost savings, as it posted the biggest ever quarterly profit for a bank on the back of the bargain acquisition that closed in June.
The Zurich-based lender reported a $29 billion profit before tax in the second quarter, a result of the accounting difference between the $3.8 billion price UBS paid for Credit Suisse and the value of the acquired lender’s balance sheet. The bank confirmed that Credit Suisse’s local unit will be completely absorbed into the parent company and the brand retired, likely by 2025.
UBS Chief Executive Sergio Ermotti is working through the implementation of one of the biggest mergers ever in global finance, balancing the opportunities from a client asset pile that’s now swollen to more than $5 trillion with the risks inherited from Credit Suisse’s failed business model. The deal was hastily assembled in March as Credit Suisse hurtled toward bankruptcy after clients lost confidence in the 167-year-old institution.
“There is no room for nostalgic considerations,” Ermotti said in an interview with Bloomberg Television’s Francine Lacqua Thursday. “We are executing on the strategy, we are making very good progress.”
So far, investors and clients agree, with shares surging more than a third this year to hit the highest since the financial crisis in 2008. They jumped as much as 7.2% in Zurich on Thursday.
In a concrete sign of job reduction plans, Ermotti said that UBS will remove some 1,000 positions in Switzerland as a result of overlaps in the domestic banking businesses. A further 2,000 roles are expected to go in the country in group functions.
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