Analysis of UBS result: Now the daily difficult integration begins

The acquisition of CS is currently costing UBS billions, mainly in the form of lost profits. It will probably take 2027 or even 2028 for the new UBS to return to its previous size, especially in terms of profitability.

Shareholders are not happy

It’s not a good look for shareholders. They are not beholden to gifts from UBS – more dividends and a resumption of the share buyback programme. UBS’ numbers are causing many to hit the sell button, and the stock remains in the red all day.

Shareholders are unimpressed by one-time record profits. More significant are the numbers in the last two quarters, when CS was fully integrated into UBS. There was a loss each time: $785 million in the third quarter, $279 million in the fourth quarter. Not alone, but also because of integration costs.

It will soon be a year since the bank earthquake at Paradeplatz, and the luster of the CS rescue team will have faded. Day-to-day integration at UBS is now a challenge. Primary systems are shut down, departments are closed, cost savings goals are set, and unprofitable jobs are terminated.

Even more savings

Compared to costs at the end of 2022, the new UBS now wants to save $13 billion. At the very least: the announced layoffs of 3,000 workers in Switzerland should not be tightened as a result. The biggest bloodshed is expected to occur in the second half of 2024. Until then, there will remain great uncertainty among employees.

Many tellers or customer advisors in Switzerland will soon no longer need this. “The total number of branches in the future will probably be close to the number of UBS branches before the integration,” Ermotti said in a conference call with reporters. UBS currently operates approximately 190 own branches and approximately 95 CS branches in Switzerland.

UBS faces a tough and rocky road. UBS boss Sergio Ermotti (63) likes to use the marathon image to describe the integration process. So far, about a third of the distance has been covered.

Address sequence

As every runner knows: There is no marathon without a crisis! Fatigue attacks are also part of this, with cramps threatening from about half the race distance and the famous “Hammermann” striking after about two-thirds. The finish line won’t appear until the end of 2025. By then all customers should be able to use the new platforms. This means that the final lights out on CS will start from 2026. Then finally the plug will be pulled on the old traditional bank.

And by then at the latest, UBS will know who should follow in the footsteps of extreme banker Sergio Ermotti, who, by his own statements, wants to run the bank for another three to five years. For the new UBS to have a prosperous future after the successful integration of CS, the bank needs a new leader. We don’t have much time left to find the right man or woman for this mission.