Money

UBS shares plummet as bank cuts Credit Suisse costs

  • UBS shares on track for worst day since banking crisis
  • Swiss bank announces plans to cut billions more in costs
  • Net loss of $279 million for the fourth quarter
  • UBS targets $13 billion in savings by end of 2026
  • Combined workforce reduced by 4,000 in Q4

Introduction

UBS Group shares are experiencing a significant decline as the Swiss bank grapples with the challenges of absorbing its ex-rival, Credit Suisse. The bank’s shares are on track for the worst day since the banking crisis nearly a year ago, prompting concerns among investors. UBS has announced plans to cut billions more in costs as it works to integrate Credit Suisse, which faced near-collapse in March 2023.

Main Content

UBS Reports Net Loss for Q4

In the fourth quarter, UBS Group posted a net loss of $279 million, following a loss of $785 million in the previous quarter. This disappointing performance can be attributed to approximately $1.75 billion in expenses related to the integration with Credit Suisse. Analysts had expected a narrower loss of $205 million, and the actual figures fell short of expectations. Despite reporting a revenue increase from $8.03 billion to $10.855 billion, UBS still faces significant challenges ahead.

UBS Targets Cost Reductions

To address the financial difficulties and streamline operations, UBS has set a target of $13 billion in savings by the end of 2026. While the bank did not explicitly mention job reductions, there is speculation that restructuring and optimizing the combined businesses may lead to workforce reductions. In the fourth quarter alone, UBS reduced its combined workforce by 4,000, bringing the year-to-date reductions to 17,000. These cost-cutting measures are aimed at achieving sustainable long-term growth and higher returns.

Market Reaction

As news of UBS’s poor financial results and cost-cutting plans spread, the bank’s shares plummeted by 4.5% to $28.43 per share. If this downward trend continues, it would mark the lowest close since early December 2023. The magnitude of this percentage loss is the largest since the regional banking crisis that ultimately led to Credit Suisse losing its independence. Investors are closely monitoring the situation, and the market’s reaction indicates concerns about UBS’s ability to successfully absorb Credit Suisse.

Conclusion

The market’s response to UBS’s announcement of further cost-cutting measures and its poor financial results highlights the challenges the bank faces in absorbing Credit Suisse. With UBS shares experiencing their worst day since the banking crisis, investors are questioning the bank’s ability to navigate this integration successfully. As UBS targets significant cost reductions and streamlines operations, it remains to be seen how these measures will impact its long-term growth and profitability.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *