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UBS chair says 2024 will be key year for Credit Suisse merger, flags ‘sticky costs’

UBS chairman Colm Kelleher has said that 2024 will present a key “challenge” to the Switzerland-based banking giant’s merger with troubled Credit Suisse as he focused on dealing with “sticky costs”.

The state-brokered deal came after years of scandal at Credit Suisse, which led to mass client outflows and a share slump.

“So far, we’ve over-delivered,” Kelleher said.

Speaking at the Financial Times’ Global Banking Summit on Tuesday, he added: “When you do an integration, it’s massively complicated. The easy part is the initial job losses when you get rid of headcount.”

UBS has confirmed that it cut 4,000 jobs from July to September, bringing total layoffs to 13,000 this year as the bank seeks to avoid duplicating roles.

Chief executive Sergio Ermotti is set to announce a strategy for the merged banks in February but is battling high costs as he winds down Credit Suisse’s unprofitable businesses while fully integrating its key Swiss banking unit by the end of 2026.

Kelleher flagged “sticky costs” associated with integrating Credit Suisse’s control functions, legal entities, IT applications and data integration.

“So, in many ways, we have to close down and shutter those legal entities, transfer all that data across, before we can even get rid of those control functions and the associated costs,” he said.

“Any integration is a J-curve, and 2024 is the first year where we don’t have the cover of getting rid of the easy costs.”

He noted that UBS would aim to “decommission what was Credit Suisse” and “legally and effectively merge the two parent banks” next year, which would “allow us to tackle this issue on costs and try and get more out of the back years — 2025, 2026”.

He also called for Switzerland’s financial regulator to be given more “teeth” as the collapse of Credit Suisse showed it did not have the right powers.