UBS to cut another $3 billion in costs as it absorbs Credit Suisse

London (CNN) — UBS has deepened a cost cutting drive launched after its emergency acquisition of rival Credit Suisse, as it slashes thousands of jobs and tries to boost earnings to make sure the mammoth deal pays off.

Posted 10:06 a.m. Feb 6 — Updated 10:06 a.m. Feb 6

Hanna Ziady

, CNN

CNN — London (CNN) — UBS has deepened a cost cutting drive launched after its emergency acquisition of rival Credit Suisse, as it slashes thousands of jobs and tries to boost earnings to make sure the mammoth deal pays off.

The Swiss lender said Tuesday that it was now targeting $13 billion in savings by the end of 2026 — $3 billion more than it announced six months ago.

The savings will provide “necessary capacity for reinvestment to reinforce the resilience of our infrastructure as we absorb Credit Suisse and to drive sustainable growth by investing in talent, products and services,” it added.

The additional cost reductions are likely to mean thousands more job cuts. Already, UBS (UBS) slashed headcount in the fourth quarter by more than 3,100 to under 113,000, taking the number of layoffs announced last year above 16,000. The bank shed 3,000 jobs in Switzerland alone in 2023.

“2023 was a defining year in UBS’s history with the acquisition of Credit Suisse,” CEO Sergio Ermotti said in a statement.

“As we move to the next phase of our journey, we will focus on restructuring and optimizing the combined businesses. While our progress over the next three years will not be measured in a straight line, our strategy is clear.”

UBS reported a net loss of $279 million for the October-to-December period, its second consecutive quarterly loss, partly driven by costs tied to the deal. It follows a loss of $785 million for the June-to-September quarter.

UBS agreed to buy Credit Suisse last March for the bargain price of $3 billion in a rescue orchestrated by Swiss authorities to avert a banking sector meltdown. The deal, the biggest in banking history, has created a giant Swiss bank with assets of more than $1.7 trillion.

Since closing the acquisition in June, UBS saw $77 billion of net new money flow into its global wealth management business and attracted the same net amount of deposits across the group.

For 2023 as a whole, UBS reported a profit of $29 billion, which largely reflected an accounting gain booked on the difference between the knockdown price it paid for Credit Suisse and the much higher value of the failing lender’s balance sheet.

UBS also said it would reinstate its dividend of 70 cents a share and buy back up to $1 billion in shares in the second half of this year, resuming a program to return capital to shareholders that it had paused following the Credit Suisse deal.

Ermotti has previously said that 2024 will be the “pivotal” year in the takeover of Credit Suisse, with the migration of IT systems presenting huge risks as the two banks merge operations across more than 50 countries.

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