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UBS is fretting about Credit Suisse IT systems, but Credit Suisse technology MDs have left

When UBS CEO Sergio Ermotti spoke yesterday about the progress of the Credit Suisse integration, he suggested that it's the technology UBS has inherited from the defunct Swiss rival that keeps him awake at night. UBS is only bringing over 10% of Credit Suisse's 3,000 applications. If this migration and the decommissioning of the other 90% of Credit Suisse applications don't go to plan, Ermotti said UBS's cost-cutting intentions may be thwarted.

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What's at stake? UBS said last year that 20% of costs in its non-core unit related to IT infrastructure during the second half of 2023. In the first quarter of 2024, non-core costs were $1bn, implying that non-core IT costs could be as high as $800m if UBS doesn't cut spending as hoped this year. 

The decommissioning of the apps still has a long way to go. Ermotti reportedly said yesterday that 30% of apps are due to be decommissioned in 2024, mostly in Asia, and mostly towards the end of this year. In the chart below, released at the end of 2023, UBS said it intends to cut apps as it cuts trading books. Both are due to be wound down by 2026.

Source: UBS 

Former Credit Suisse technologists have explained why the process is so complicated. Speaking last month, one ex-technology MD told us that Credit Suisse (like many other banks) developed a multitude of different risk systems. "Pretty much every department at Credit Suisse built and maintained its own risk systems," he says. "During the good times, this led to risk systems for prime, equity, rates, FX, credit, and other smaller regional departments." Many of these systems were cut back under Tidjane Thiam. Many were not. 

As UBS gets to grips with Credit Suisse's IT closet, it might be supposed that experienced Credit Suisse technologists would be retained to help uncover the skeletons. In fact, as we've reported, a lot of Credit Suisse's most senior trading technology professionals have left UBS, seemingly of their own accords. These include Sreej Menon, the former global head of credit products and banking technology at Credit Suisse, who joined Santander in December and Marinela Tudoran, the head of technology for the investment bank, who was reported as leaving in May, but reportedly hadn't been seen for months before that.  

If Ermotti is worried, maybe he should have tried harder to keep Credit Suisse's key technologists happy? UBS spent $555m on staff payments relating to the integration in Q1, including severance expenses and retention. Paying to retain key technologists would seem to make good sense in the circumstances.

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Photo by ÉMILE SÉGUIN ✳️✳️✳️ on Unsplash

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AUTHORSarah Butcher Global Editor

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