Swiss banking giant UBS Group (NYSE:UBS) is trimming its workforce following the forced government-backed takeover of failing bank Credit Suisse earlier this month. As per a Bloomberg report, UBS will cut roughly 35,000 positions or 30% of the combined entity’s workforce. At the time of its acquisition by UBS, Credit Suisse had a workforce of 45,000 employees. After the merger, the combined entity had a total employee count of 120,000, with a balance sheet size of $1.6 trillion.
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Further Details of the Planned Layoffs
According to the report, the number 35,000 indicates that over half of Credit Suisse’s staff will be subject to layoffs. The job cuts could begin in late July, with two more rounds expected in September and October. The layoffs will mostly cover roles in Credit Suisse’s investment banking division, including bankers, traders, and support staff across London, New York, and parts of Asia.
Both UBS and Credit Suisse were considered Switzerland’s behemoth universal banks, with operations spanning worldwide and covering every area of banking. However, Credit Suisse became a victim of the recent banking crisis in March, prompted by a major weakening in investor confidence regarding its solvency. The banks have several overlapping divisions, and a decision to cut the workforce was already on the cards, as warned previously by the newly instated CEO, Sergio Ermotti. The process of merging operations for a large bank like Credit Suisse and dealing with the associated challenges is indeed complex. Several tough decisions often need to be made during such transitions. Plus, UBS is facing hundreds of millions of dollars in fines due to Credit Suisse’s failings in the Archegos Capital debacle.
What is the Price Target for UBS Stock?
On TipRanks, the average UBS Group price target is $25.89, implying an impressive 30.2% upside potential from current levels. Wall Street is cautiously optimistic about UBS, giving it a Moderate Buy consensus rating. This is based on six Buys, four Holds, and one Sell rating.
On June 27, Morgan Stanley analyst Alvaro Serrano reiterated a Hold rating on UBS given the “execution uncertainty” on the Credit Suisse acquisition. According to the analyst, the acquisition is expected to have a positive impact and become accretive in 2026. However, the years 2023 and 2024 are anticipated to be challenging. Serrano has a price target of $23.47 for UBS, which implies 18.1% upside potential. Year to date, UBS stock is up 7.6%.
