UBS resists demands to shrink as Swiss regulators turn up pressure

Speaking on Friday, UBS’s top executive, Sergio Ermotti, said the bank will not downsize, despite calls from Swiss regulators to shore up its stability in the wake of the Credit Suisse acquisition.

Ermotti expressed confidence that UBS and regulators in Bern can find a workable compromise and stressed that cutting the bank’s size would not be in its best interests. He remarked, “Shrinking the bank is not a strategy.”

Ermotti clarified that UBS intends to remain in Switzerland

UBS has been pushing back against several measures introduced in June to protect Switzerland if its sole global lender comes under financial pressure. One proposal would require UBS to raise the capitalization of its non-Swiss units from 60% to 100% to absorb foreign losses. However, analysts caution that meeting this requirement could force the bank to set aside an extra $24 billion, limiting its ability to return capital to shareholders.

According to reports, the bank had been drawing up contingency plans and even exploring whether it might move its headquarters abroad. In July, sources familiar with the matter claimed the Swiss Lender was considering shifting its base to London. At the same time, they stated the bank had raised concerns internally that the proposed rules could leave it vulnerable to a foreign takeover. Nonetheless, Ermotti later stated the bank remains committed to staying in Switzerland.

At a business conference this Friday, the executive maintained that UBS’s strength lies in its global reach and claimed that shrinking would be the wrong move. He remains confident that a middle ground can be found that spares the bank from having to set aside billions more in capital under the proposed rules.

Still, according to insiders, the lender now anticipates missing its workforce reduction target before completing the Credit Suisse merger next year. Since the beginning of 2024, the bank has reduced roughly 1,300 positions each quarter, leaving its workforce above 105,000 full-time staff as of June. However, the bank is unlikely to meet its internal target at the current rate of reductions.

Although the bank hasn’t officially shared its headcount target, according to the Financial Times, insiders said executives want to reduce total staff to 85,000 by the end of the integration process.

UBS is working on cost-cutting before the full integration of Credit Suisse

UBS’s CFO Todd Tuckner told analysts in August that cost-cutting efforts would be split evenly between technology and workforce-related savings. The Credit Suisse acquisition has brought in about 45,000 additional employees, lifting total staff to more than 119,000 at its peak. However, around 14,000 full-time jobs were slashed.

Ermotti, earlier this year, said UBS experiences about 7% natural turnover annually, but per an insider, the attrition rate has fallen, making workforce reduction harder. Nevertheless, the bank has been focusing on internal mobility, with over two-thirds of Swiss vacancies filled internally last year.

In August, the lender transferred more than a million Credit Suisse retail customers to UBS’s systems, resulting in hundreds of domestic job losses. However, full savings won’t be reflected until the bank’s old systems, remaining from Credit Suisse’s legacy platforms, are fully phased out after March 2026. UBS had already committed to making reductions over time, mainly through attrition, early retirement, internalizing external roles, and coaching for those affected to help their careers.

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