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UBS to absorb Credit Suisse domestic unit, eyes billions in cost savings

UBS will fully integrate Credit Suisse’s Swiss unit after its $3.25 billion takeover.

The move aims to save over $10 billion by 2026, with job cuts expected. UBS reported a $29.2 billion Q2 profit, while Credit Suisse posted a $10.1 billion loss.

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ZURICH, SWITZERLAND — Banking giant UBS said Thursday it would fully absorb the Swiss unit of its recently-swallowed rival Credit Suisse into its operations, without spelling out the implications for job cuts.

Switzerland’s largest bank, which was strongarmed into a US$3.25-billion takeover of its closest domestic rival in March to keep it from going under, said it aimed to complete most of the integration by the end of 2026, and was eying more than US$10 billion in cost savings by then.

“Two and a half months since closing the Credit Suisse acquisition, we are wasting no time in delivering value for all our stakeholders from one of the biggest and most complex bank mergers in history,” UBS chief executive Sergio Ermotti said.

The announcement came as UBS posted its second-quarter income statement, presenting its first results since the mega-merger that rocked Swiss banking was finalised in June.

The results were strong for UBS, which posted a towering net profit of US$29.2 billion. Credit Suisse took a US$10.1 billion loss over the same period.

‘Full integration’

Credit Suisse had been plagued by scandals prior to the takeover, which was precipitated by fears that a crisis in regional US banks would cross the Atlantic.

Investors and employees alike have been eager for any clues as to the fate of Credit Suisse’s Swiss division, with questions over whether it could continue to operate independently due to the significant overlap with UBS’s business in Switzerland.

The answer was no.

“Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy,” Ermotti said.

“Our goal is to make the transition for clients as smooth as possible,” he said.

“The two Swiss entities will operate separately until their planned legal integration for 2024 with the gradual migration of clients onto UBS systems expected to be completed in 2025.”

UBS did not immediately indicate what level of job cuts its preferred option could entail, but they could be significant.

The combined banks jointly counted around 120,000 staff worldwide at the end of 2022, including 37,000 in Switzerland.

Credit Suisse suffers US$10 bn loss

Even before the results were released, it was obvious the merger combined two banks pulling in diametrically different directions.

While Credit Suisse in recent years has been racking up towering losses, posting a massive 7.3-billion Swiss franc (US$8.3 billion) net loss in 2022, UBS posted a US$7.6 billion net profit.

And Thursday’s announcement showed that Credit Suisse’s woes had continued to pile up, with the former second largest bank in Switzerland had suffered a pre-tax loss of 8.9 billion Swiss francs (US$10.1 billion) in the quarter.

UBS meanwhile has continued to project strength, announcing earlier this month that it does not need the billions in support offered by the Swiss government and the central bank to go through with the takeover.

But its US$29.2-billion profit in the second quarter was heavily distorted by the gigantic takeover, which brought with it a string of exceptional items, and was not comparable with the year-ago quarter.

UBS is now tasked with cleaning house to smooth the integration.

It has already begun paying for its former rival’s mistakes.

In July, it dished out US$387 million to cover a fine imposed by the US Federal Reserve and the Bank of England over Credit Suisse’s failure to adequately manage the risk posed by the US investment fund Archegos, whose dramatic implosion cost the bank $5.5 billion in losses.

In another apparent sign of looming changes at the investment bank, Credit Suisse sent a letter to investment clients, seen by AFP on Wednesday, indicating it would “reduce its volume of new business from September 22”, and had begun redirecting its investment clients to UBS for all market activities.

— AFP

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International

UN General Assembly overwhelmingly adopts resolution calling for Israel to end occupation of Palestinian territories

The UN General Assembly has passed a resolution urging Israel to end its occupation of Palestinian territories within a year. Backed by an ICJ advisory opinion, the resolution reflects broad international opposition to the occupation, though key nations like the US opposed it.

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11 hours ago

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19 September 2024

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The United Nations General Assembly (UNGA) has passed a resolution calling on Israel to end its occupation of Palestinian territories within a year, a decision that Palestine hailed as “historic.”

The nonbinding resolution, passed by a vote of 124-12 with 43 abstentions, demands Israel end its “unlawful presence” in the Occupied Palestinian Territory within 12 months and pay reparations for damages incurred during the occupation.

The resolution also backed an advisory opinion from the International Court of Justice (ICJ), which had previously declared Israel’s presence in the Palestinian territories to be unlawful.

The ICJ stressed that Israel, as an occupying power, is in violation of international humanitarian law due to its settlement activities in the West Bank and East Jerusalem.

The UNGA vote occurred as Israel continues its military campaign in Gaza, where more than 41,250 Palestinians have been killed.

The ICJ had earlier issued rulings urging Israel to prevent genocide in Gaza and ensure adequate humanitarian aid reaches the population.

Among the 12 countries opposing the resolution were Israel, the United States, Czechia, Hungary, Argentina, and several Pacific island nations.

The US, which claims to support a two-state solution to the conflict, joined Israel in opposing the resolution.

Palestinian Authority President Mahmoud Abbas welcomed the resolution, calling on the international community to pressure Israel to comply.

“The international consensus over this resolution renews the hopes of our Palestinian people…to achieve its aspirations of freedom and independence,” Abbas said, emphasizing the establishment of a Palestinian state with East Jerusalem as its capital.

NGOs Urge UN Member States to Uphold ICJ Opinion and Halt Arms Sales to Israel

Additionally, over 30 NGOs, including Amnesty International, Oxfam, and War Child, urged UN Member States to adhere to the ICJ’s advisory opinion, which denounced Israel’s decades-long occupation.

The NGOs highlighted ongoing human rights abuses such as forced displacement, settler violence, and a discriminatory permit regime limiting Palestinians’ access to essential services.

These organizations also called for a halt to arms sales to Israel, which they argue have contributed to a humanitarian catastrophe.

Singapore and Malaysia Vote in Favour of UN Resolution

Ambassador Burhan Gafoor of Singapore expressed support for the UNGA resolution based on respect for international law and the International Court of Justice.

“Singapore has always attached the greatest importance to international law and the principles of the UN Charter. ”

“We voted in favour of this resolution after careful and thorough consideration due to our respect for the International Court of Justice, which is the principal judicial organ of the United Nations as well as for international law more broadly.”

However, he highlighted several reservations, including concerns over using the ICJ’s advisory jurisdiction to address political disputes and the resolution’s potential to harden positions between Israel and Palestine.

Gafoor emphasised that any solution to the conflict must come from direct negotiations between the two parties and expressed concern over the resolution’s overreaching measures that could hinder the peace process.

Malaysia welcomed the UN’s decision to implement the ICJ ruling, noting that the UN resolution underscores the collective responsibility and legal obligations of all States and international organisations to end Israel’s illegal occupation of Palestine and seek justice for the Palestinian people.

“Malaysia urges the international community to implement the Resolution in its entirety and without delay, for the Palestinians to exercise their right to self-determination, safeguard sovereignty and territorial integrity, as well as pursue socioeconomic development.”

“The resolution affirms Malaysia’s position on this long-standing issue,” the statement read.

The ICJ’s July opinion found that Israel’s occupation and annexation of Palestinian territory violated fundamental principles of international law, asserting that no state should recognize or assist Israel’s continued presence in these territories.

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International

Explosive devices target Hezbollah in Lebanon, killing 20 and injuring over 450

Explosions targeting walkie-talkies killed 20 and injured over 450 in Lebanon. The attack, suspected to be carried out by Israel, escalates tensions with Hezbollah, raising international concerns of a potential war crime.

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11 hours ago

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19 September 2024

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A coordinated series of explosions targeting walkie-talkies in Lebanon killed at least 20 people and injured more than 450 on Wednesday, prompting international concerns that the attacks may constitute a war crime.

Thousands of booby-trapped communication devices exploded across Lebanese cities, particularly in Hezbollah strongholds, just one day after a similar attack involving pagers killed 12 and injured over 2,800.

Israel is widely suspected of being behind the strikes, escalating tensions with Hezbollah.

The explosions, described as “small in size” but widespread, mark a potential shift in the ongoing conflict between Israel and Hezbollah, an Iran-backed militant group that controls parts of Lebanon.

International observers have condemned the attacks, with UN Secretary General António Guterres calling for restraint while noting that the scale and strategy of the operation suggest it could be a prelude to a broader Israeli military assault on Lebanon.

On Tuesday, Israeli media reported that the decision to detonate the devices might have been driven by fears that Hezbollah was close to discovering Israeli efforts to sabotage its communications infrastructure.

Hezbollah confirmed that its walkie-talkies had been targeted in Wednesday’s explosions.

The attacks came shortly after a meeting between Israeli Prime Minister Benjamin Netanyahu and US officials aimed at de-escalating the situation.

UN Human Rights Chief Volker Türk warned that the indiscriminate nature of the explosions violated international law, as the devices targeted may have been in civilian possession.

Human Rights Watch echoed the sentiment, highlighting that booby traps such as these, which explode without specific targeting, breach international humanitarian law.

While Israel has not officially claimed responsibility for the attacks, Israeli Defense Minister Yoav Gallant praised Israeli intelligence agencies for their “great achievements” during a visit to a northern air force base, while stressing that military resources were being diverted northward to confront Hezbollah.

Netanyahu reaffirmed Israel’s commitment to returning northern Israeli residents to their homes, further suggesting a potential escalation.

Lebanese officials, including Hezbollah, have blamed Israel for the attacks, vowing retaliation. The explosions occurred during a tense period in Lebanon, where ongoing violence threatens to spiral into a broader regional conflict.

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