The bank’s digitization plans will cost thousands of jobs in the coming months. UBS CEO Ralph Hamers is set to reactivate a series of cuts it had paused when Covid-19 broke out.
Digitization always costs jobs, Ralph Hamers said in October of 2016 when ING disclosed it would eliminate 7,000 of them. The Dutch bank wanted to act from a position of strength, he said, noting the move was less about saving 900 million euros ($1.1 billion) than about making targeted investments in renewal.
Nearly five years later, Hamers is applying a similar play to UBS: he wants to save $1 billion by 2023 in order to re-invest in the U.S. and Asia, where the Swiss bank wants to grow. For UBS’ 72,000 employees, it is clear that the cost-cutting goal will primarily be reached by cutting jobs.
Of course, the 54-year-old Dutch CEO wasn’t that explicit on Tuesday, when he fleshed out UBS’ new slogan Reimagining the power of investing. Connecting people for a better world. Under Hamers, UBS will become more focused on clients, digital, and agile, he said.
That means streamlining the Swiss lender’s famously bureaucratic processes, including through robotics. The principal aim is to whip UBS into a technology-leading bank with digital services that stand out from competitors like Spotify or Netflix do in the media industry.
People familiar with Hamers’ thinking are flagging job cuts across most areas of the bank, and especially where UBS can make existing technology and applications more efficient. The bank plans to keep moving some jobs into lower-cost locations like Poland and India.
It is also looking to leave activities where it isn’t satisfied with financial results; it abandoned Austria onshore in December and is reportedly looking to get out of Spain. The disposals also lower UBS’ headcount, normally without «costing» jobs.
How many jobs Hamers plans to cut isn’t clear, but a simple equation based on the $1 billion target, a lower-than-average salary in Switzerland’s financial sector, and the assumption that 70 percent of spending is on people would indicate as many as 3,000 jobs are on the block in the next 18 months.
The job cuts are likely to be Hamers’ first major measure at UBS – and they are being closely watched by the bank’s board. Effectively, he needs to make himself indispensable to UBS in their view; Hamers is weakened by a Dutch criminal probe reignited after he joined the Swiss bank last fall.
The aim of the digitization and transformation Hamers was hired for is saving money, not raising the overall cost base. UBS’ cost-income ratio edging higher in the first quarter – to 73.8 percent – underscores the import of more efficiency versus U.S. competitors who are operating leaner.
A $300 million restructuring charge in the coming quarter also indicates the cuts to come. This represents a revival of UBS’ plans paused last March under former CEO Sergio Ermotti.