According to a media report, UBS is strategizing to save hundreds of millions of dollars in its fund business. This may also have implications for Swiss personnel at the combined major bank may.

The bank management's intervention has been anticipated, and now it may be happening: UBS is reportedly set to subject the fund business combined with Credit Suisse (CS) to a strategic review.

As a first step, costs in the asset management division are to be reduced by at least $300 million, as reported by «Reuters» from an anonymous source.

Job Cuts in the Back Office?

The potential savings reportedly also affect the staff, including those previously working for CS's back-office services in Switzerland. According to the report, the management is also considering whether parts of the division should be integrated into global wealth management (GWM), UBS's core business. The bank itself declined to comment on this to the agency.

The leadership is apparently reacting to a poor financial performance reported by Asset Management in the fourth quarter. By the end of 2023, the combined fund business managed assets of around $1.6 trillion, making it the ninth-largest provider of financial products globally and number one in Europe.

Costs Rapidly Climbing

Nevertheless, the last quarter alone saw a significant outflow of $12 billion in client funds, coupled with a pre-tax profit decrease of 5 percent compared to the previous year, alongside a notable one-third increase in costs.

In early January, Suni Harford was replaced as head of the division by Aleksandar Ivanovic, as reported by finews.ch. According to the report, UBS's top management sees the need for action beyond the leadership change.

Management Under Pressure

Under the leadership of CEO Sergio Ermotti, the management team is facing mounting pressure: it has promised shareholders savings of $13 billion across the entire bank by 2026 in connection with the CS integration. The strict adherence to this savings plan has since been inextricably linked to the stock price of the major bank.

Accordingly, the executive board must act immediately if temporary setbacks in business threaten this plan.