UBS Announces Absorption of Credit Suisse Swiss Operations and Massive Job Cuts

UBS, the Swiss multinational investment bank, has announced plans to cut over 3,000 jobs in Switzerland as part of a massive cost-cutting initiative. The job cuts come after UBS absorbed its struggling rival, Credit Suisse, and highlight the challenges the bank faces in consolidating the operations of the two banks. The majority of the cost savings are expected to come from reducing staff, and analysts estimate that up to 35,000 jobs could be cut globally. UBS CEO Sergio Ermotti stated that a full integration of the two banks is the best outcome for UBS and the Swiss economy. Despite the job cuts, UBS reported a profit of $29 billion for the second quarter, due to a significant one-off gain related to the acquisition of Credit Suisse. The announcement of the job cuts caused UBS shares to rise by 6%, reaching highs not seen since 2008. However, the decision to absorb Credit Suisse’s local operations instead of spinning them off has been met with criticism in Switzerland, with some arguing that it poses a major systemic risk and will have a negative impact on employment and fair competition. Proxy adviser Ethos, representing Swiss pension funds and foundations, has even backed a class-action lawsuit seeking a better price from UBS for the takeover. The merger of UBS and Credit Suisse, orchestrated by the Swiss government, has created a massive banking group, but it also presents significant challenges for regulators and policymakers in Switzerland.