by Noele Illien

ZURICH (Reuters) – UBS said on Thursday the group would fully absorb the Swiss arm of Credit Suisse, a move that comes despite a likely backlash in the country, where it could lead to the loss of thousands of jobs.

The world’s largest wealth manager has raised the amount of savings it expects from the deal, forecasting $10 billion by the end of 2026, up from a previous estimate of $8 billion. by 2027. Most of the savings are expected to come from downsizing.

This highly anticipated announcement was made simultaneously with the release of UBS’s first results since taking over its struggling rival.

UBS could have spun off the business and taken it public, but the domestic arm has been a strong source of profit for Credit Suisse and was the only division to post positive results last year.

“Our analysis clearly shows that full integration is the best solution for UBS, our stakeholders and the Swiss economy,” Chief Executive Sergio Ermotti said in a statement.

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

Credit Suisse reported net asset outflows of 39 billion Swiss francs (40.67 billion euros) for the second quarter, showing that the bailout by UBS failed to stem the loss of confidence.

However, UBS said asset outflows occurred at a slower pace compared to previous quarters and the flow turned positive in June.

UBS for its part posted a net profit of 29 billion dollars for the second quarter.

This profit is linked to an exceptional gain which reflects the fact that the acquisition costs were well below the value of Credit Suisse. It is slightly lower than the estimate at 33.45 billion dollars, according to a consensus established by the company.

(Report Noele Illien; Nathan Vifflin, edited by Kate Entringer)

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