By Andrew Welsch
UBS Group is working at "full speed" to integrate Credit Suisse, the longtime rival it bought at a fire sale price earlier this year, CEO Sergio Ermotti said Wednesday.
UBS (ticker: UBS) is also working on a three-year strategic plan that will be announced in February, Ermotti said at a Bank of America financial services conference in London.
The addition of Credit Suisse has given UBS an enormous wealth management platform. But integrating the two businesses is hard work, Ermotti said. The Swiss bank is looking to cut costs and reduce headcount. It previously said it expects cost savings of $10 billion by the end of 2026. Ermotti said some of the headcount reduction may occur through natural attrition. UBS is also evaluating what systems and procedures it can jettison to streamline operations, according to the chief executive.
"There are 3,000 IT applications at Credit Suisse. We'll keep 300," Ermotti said. "The name of the game isn't to get perfection, but to aim for balance and efficiency."
Of course, the game itself has changed for UBS since the start of the year. For a long time, it competed with Credit Suisse to manage the fortunes of rich clients across the globe. But after Credit Suisse suffered large outflows of clients and assets and was on the brink of failure, regulators convinced UBS to step in. UBS bought its rival earlier this year for approximately 3 billion Swiss francs ($3.4 billion).
Since then, UBS has changed CEOs, bringing back Ermotti who led the bank after the financial crisis. It made additional leadership changes in May and June. And in August, UBS voluntarily terminated agreements with the Swiss government, under which the government provided a backstop against losses from the Credit Suisse acquisition.
Though the Credit Suisse integration requires a lot of work, the acquisition is worth it to UBS, Ermotti said. The deal boosted UBS' wealth management and Swiss banking businesses.
"We now manage between private and institutional parts $3.5 trillion. That gives us enormous economies of scale," Ermotti said. "The momentum is pretty positive."
Investors are also feeling positive about UBS; the stock tumbled in the immediate wake of the Credit Suisse deal, but has climbed since then and is up 41% this year.
Write to Andrew Welsch at andrew.welsch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
September 20, 2023 14:31 ET (18:31 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
