Proactive Investors - There was a lot to unpack in UBS Group AG (SIX:UBSG)’s full-year results published on Tuesday, chiefly the Swiss bank’s absorption of former Swiss competitor Credit Suisse (SIX:CSGN).
As earlier reported by Proactive, this Swiss state-backed takeover resulted in a $29 billion accounting gain, which comprised some 96% of UBS’s before-tax profit.
A stunning coup for UBS, even if integration costs resulted in a fourth-quarter loss of $279 million.
But this near-hit bottom-line hit pales in comparison to the cost-cutting measures UBS has in store in the years ahead.
The group is targeting $13 billion worth of gross cost reductions by the end of 2026; with 50% of cumulative exit rate gross cost reductions expected by end of 2024
UBS fell shy of explicitly announcing further job cuts, but the implications were there to read between the lines.
“Completing the mergers of our significant legal entities is a critical step in enabling us to unlock the next phase of the cost, capital and funding synergies we expect to realise in 2025 and 2026,” read UBS’s annual report.
“These significant legal-entity mergers are a prerequisite for the first wave of client migrations and will allow us to begin streamlining and decommissioning legacy Credit Suisse platforms in the second half of 2024,” it added.
Furthermore: “Our gross cost 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.”
CDost-cutting measures should also result in higher shareholder returns, if the bank’s 27% year-on-year increase in its dividend to $0.70 per share in anything to go by.
Imminent job cuts should come as no surprise: When UBS took over Credit Suisse for pennies on the pound last year, insiders said as many as 11,000 Switzerland-based employees could be laid off.
UBS and Credit Suisse had around 11,000 workers in the City of London at the time of their March 2023 merger; that number will inevitably be slashed as part of UBS’s $13 billion worth of cost-cutting measures.
City job posts plummet
Out-of-work former UBS and Credit Suisse employees will be in good company- City institutions have been on a sacking spree amid a testing time for the UK financial sector.
Earlier this week, CMC Markets announced plans to save £21 million per year by cutting 200 City jobs.
Germany’s biggest bank Deutsche Bank AG (ETR:DBKGn), which has over 7,000 employees across London and Birmingham, last week announced a 4% global headcount reduction, though it didn’t specify which offices would be most affected.
Accounting firm KPMG, rival Deloitte, Barclays PLC (LON:BARC) and Citigroup Inc (NYSE:C) all announced layoffs in the second half of 2023.
City recruiter Morgan McKinley noted a 42% decrease in jobs available year-on-year in the fourth quarter of 2023, outpacing the 15% decrease in job seekers.
“2022 saw a very competitive job market propelled by a robust year of wage expansion; however this changed quickly in 2023 with indications of a market slowdown influenced by the high interest rates, inflation, shortage of workers and uncertainty around the world following the post-pandemic boom and geopolitical conflicts,” said the recruiter.