Switzerland's banking landscape is in for a shakeup. UBS, the global banking titan, recently announced plans to eliminate approximately 3,000 positions in Switzerland. This move comes as part of a significant reorganization to slice $10 billion from its operational costs, after the dramatic emergency acquisition of Credit Suisse earlier this year.
A Deep Dive into the Figures
The announced job reductions represent nearly 8% of the employees in the joint Swiss ventures of this banking behemoth. UBS made headlines on Thursday by revealing a whopping net profit of $29 billion for the second quarter.
Yet, not all is as it seems. “The sheer size of the quarterly profit was a direct result of the accounting difference between the $3 billion price UBS paid for Credit Suisse and the value of the acquired lender’s balance sheet,” elaborated Jeremy Naylor, an analyst at IG.
After removing the sizeable gain, which is purely on paper, the bank's pre-tax profit stands at a more modest $1.1 billion for that quarter.
Swiss Outcry Over Deal and Job Cuts
The news of the impending job cuts is set to add fuel to an already burning controversy in Switzerland.
The merger itself faced stiff resistance, with public opinion and several political figures expressing their dismay over the deal. The Swiss Bank Employees Association, voicing the concerns of many, released a statement saying, “The Swiss Bank Employees Association demands that the 37,000 employees of the two institutions in Switzerland are treated fairly and equally in the integration process”.
In response to the rising apprehension, UBS CEO Sergio Ermotti commented during a call with analysts, “Every lost job is painful for us. Unfortunately, in this situation, cuts were unavoidable”. Ermotti sought to provide some reassurance by revealing that the layoffs would not be immediate but would be phased over several years.
He further committed that UBS would support the affected employees by offering financial assistance, outplacement services, and opportunities for retraining. The balance between business strategy and the well-being of its workforce remains a challenging tightrope for the banking giant.