Market Analysis

The IT head thinks that UBS's integration with Credit Suisse is "right on target."

Amos Simanungkalit · 10 Oct3.9K Views

UBS's integration of former rival Credit Suisse's clients and data into its own systems is progressing smoothly and remains "right on track" following a successful test run, according to the bank’s Chief Operations and Technology Officer, Mike Dargan, in an interview with Reuters.

UBS CEO Sergio Ermotti had previously identified IT integration as one of the most significant challenges UBS faces in the complex second phase of its merger with Credit Suisse, following its emergency acquisition last year. Ermotti warned in May that delays in IT integration could affect the cost savings UBS had promised to achieve.

Last month, UBS completed a key test involving the migration of several hundred Credit Suisse clients based in Hong Kong and Singapore, Dargan confirmed. "We processed a few hundred clients of varying complexity from Hong Kong and Singapore in September as part of a test case," he said. "It was a huge success—people were applauding, some were even moved to tears."

UBS plans to start migrating clients based in Luxembourg and Hong Kong in the coming weeks, followed by Singapore, with other countries scheduled for later in 2024 and beyond. In total, the bank expects to migrate 1.3 million Credit Suisse clients, Dargan noted.

"This is the largest data migration ever undertaken in a financial services M&A transaction, possibly even the largest in any sector," he added. "So far, we're perfectly on schedule with the tech integration."

Investors have responded positively to UBS’s progress in executing the largest banking takeover since the 2008 financial crisis, with UBS shares rising nearly 56% since the Credit Suisse deal was announced in March 2023.

Despite the positive outlook, the IT integration presents significant challenges due to its complexity and the vast scope of client data being transferred. UBS is working to migrate 110 petabytes of Credit Suisse data, equivalent to around 500 billion pages of printed text—enough to fill 20 million large filing cabinets. Credit Suisse also had approximately 3,000 applications, 100,000 servers, and 16 data centers.

So far, UBS has shut down around 560 applications, decommissioned 13 petabytes of data, and removed 40,000 servers. "We're nearly on target with the applications and ahead of schedule on server decommissioning," Dargan said.

Dargan, who oversees around 40,000 employees, noted that UBS plans to reduce its reliance on external contractors in its technology and operations sectors, allowing it to retain most of Credit Suisse’s permanent staff. This shift will increase the proportion of internal technology and operations employees from 60% to 85%.

UBS had approximately 110,000 employees at mid-2024, but media reports suggest the total headcount could drop to around 90,000 by 2026 as the integration nears completion.