London (CNN) — UBS expects to shed around 3,000 jobs in Switzerland to help it cut $10 billion in costs as it undertakes a sweeping overhaul following its emergency rescue of Credit Suisse earlier this year.

The job cuts amount to around 8% of staff employed by the combined Swiss operations of the global banking giant, which on Thursday reported net profit of $29 billion for the second quarter. That is the largest ever quarterly profit for a bank and it arose almost entirely from an accounting technicality related to the takeover, analysts said.

“The sheer size of the quarterly profit was a direct result of the accounting difference between the $3 billion price UBS paid for Credit Suisse and the value of the acquired lender’s balance sheet,” said Jeremy Naylor, an analyst at IG.

Stripping out that extraordinary gain on paper, UBS posted pre-tax profit of $1.1 billion for the quarter.

News of the job losses may spark new co in Switzerland, where the deal has already proved unpopular with the public and some politicians.

“The Swiss Bank Employees Association demands that the 37,000 employees of the two institutions in Switzerland are treated fairly and equally in the integration process,” the Swiss banking union said in a statement Thursday.

On a call with analysts, UBS CEO Sergio Ermotti said: “Every lost job is painful for us. Unfortunately, in this situation, cuts were unavoidable.”

Ermotti said the job cuts would be spread “over a couple of years” and that the bank would provide affected employees with financial support, outplacement services and retraining opportunities.

The bank, which has a combined global workforce of nearly 122,000, gave no further details on the numbers of likely layoffs outside of Switzerland in its earnings statement — the first report since it acquired its rival.

About 8,000 Credit Suisse employees had already left voluntarily in the first half of the year, with around half of that attrition taking place in the United States and Asia-Pacific and 10% occurring in Switzerland, UBS CFO Todd Tuckner told journalists.

Ermotti said the bank expected even more employees to resign or retire, but that jobs would still have to be cut outside Switzerland to reach savings goals. UBS (UBS) also plans to reduce its reliance on outside contractors.

Victoria Scholar, head of investment at Interactive Investor, an online platform, said the bank faced the “daunting challenge of trying to balance the need to retain key staff while simultaneously carrying out major job cuts.”

UBS closes on takeover of Credit Suisse, which has big RTP presence and is still hiring

No spinoff or IPO

UBS also confirmed plans to retain Credit Suisse’s banking operations in Switzerland, and fully absorb those into the newly merged group, rather than opting for a spinoff or IPO, even though that would have resulted in 400 fewer redundancies.

“Our analysis clearly shows that a full integration is the best outcome for UBS, our stakeholders and the Swiss economy,” Ermotti said in a statement. He added that this was “one of the biggest and most complex bank mergers in history.”

UBS said it expected to generate more than $10 billion in savings from the integration by the end of 2026 — $1 billion more and a year earlier than planned when the takeover was announced in March. The bank’s shares gained as much as 7% on the news on Thursday, and are up 35% so far this year.

UBS agreed on March 19 to buy Credit Suisse for the bargain price of 3 billion Swiss francs ($3.4 billion) in a rescue orchestrated by Swiss authorities to avert a banking sector meltdown.

Controversy in Switzerland

Credit Suisse went bust after confidence in the ailing lender collapsed and customers yanked their money. The firm had been plagued by scandals and compliance failures in recent years that wiped out its profit and caused it to lose clients.

But the death blow came after it acknowledged “material weakness” in its bookkeeping and as the demise of US regional lenders Silicon Valley Bank and Signature Bank spread fear about weaker institutions.

The combination of the two Swiss banks has caused controversy because it leaves Switzerland exposed to a single massive financial institution with a market share of about 30% and assets roughly double the size of the country’s annual economic output.

Taxpayers were originally on the hook for potential losses from the deal, but UBS said earlier this month that it would no longer need a Swiss government guarantee of 9 billion francs ($10.3 billion) for future potential losses arising from Credit Suisse assets.

It also said it no longer required a 100 billion franc ($114.2 billion) government-backed loan and that Credit Suisse had repaid an earlier loan from Switzerland’s central bank of 50 billion francs ($57.1 billion).

“Taxpayers will no longer bear any risks arising from these guarantees,” the Swiss government said at the time.

UBS and Credit Suisse will continue to operate under separate brands until at least the end of 2024, according to Ermotti. “Nothing will change for clients in the foreseeable future,” he said, adding that he would not rule out “selectively” using the Credit Suisse brand even after the banks had merged.

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