UBS Group AG, a leading financial institution, is set to undertake a workforce reduction in Switzerland, with approximately 3,000 jobs expected to be cut. The aim is to achieve significant cost savings following the acquisition of Credit Suisse. The integration process is projected to result in additional staff departures. The overall goal is to achieve gross cost reductions of more than $10 billion by the end of 2026.
UBS Job Cuts and Credit Suisse Restructuring
Of the total job cuts, 1,000 reductions will be implemented in late 2024, while 2,000 staff redundancies will occur as part of the restructure of Credit Suisse. UBS completed its acquisition of Credit Suisse through an all-share deal in June 2023. The company expects to finalize the integration process by the end of 2026, with integration-related expenses offset by fair value adjustments to financial instruments.
Legal Challenges and Operational Issues
Since UBS’s takeover of Credit Suisse, the company has faced legal challenges and operational difficulties. Class action suits and complaints from shareholders and former employees of Credit Suisse have been filed, alleging inadequate consideration of their interests. Additionally, the acquisition has resulted in an increase in UBS’s litigation portfolio due to Credit Suisse’s involvement with Archegos Capital Management.
Similar Cost Reduction Strategies in the Industry
The Charles Schwab Corporation (SCHW) is also implementing cost-saving measures to streamline its business operations. These measures include job cuts, office closures, and downsizing, with the goal of achieving $500 million in annual cost savings. The rationale behind these actions is to simplify the business and prepare for the post-integration period following the acquisition of TD Ameritrade.
Stock Performance and Investment Opportunities
UBS Group AG’s shares have shown strong performance, gaining 24.5% on the NYSE over the past six months. Another promising stock in the same industry is BBVA USA Bancshares, Inc. (BBVA). Its recent earnings estimate has been revised upward, and its shares have gained 13.4% in the past three months.
For investors looking for top stock picks, Zacks Investment Research offers a list of today’s Zacks #1 Rank stocks, including UBS Group AG, Charles Schwab Corporation, and BBVA USA Bancshares, Inc.
For a more detailed analysis and additional investment insights, read the full article on Zacks.com.