ZURICH - UBS's technology chief is confident that the hugely complex integration of Credit Suisse, bringing its former rival's clients and data onto its own platforms, is "bang on target" after a successful test run.

Chief Executive Sergio Ermotti has previously flagged that IT integration is one of the biggest risks facing UBS as it embarks on the second, trickier phase of merging with the fallen rival it acquired in an emergency rescue deal last year.

Ermotti said in May that any delay to the IT integration would hit the Swiss banking giant's promised cost savings.

UBS last month completed a test that involved migrating hundreds of Credit Suisse clients from Hong Kong and Singapore, UBS Chief Operations and Technology Officer Mike Dargan told Reuters in an interview in Zurich.

"We put a couple of hundred clients of different complexities from Hong Kong and Singapore through a test case in September," he said.

"This went very well. The entire floor was applauding. There were tears."

The bank will begin migrating clients booked in Luxembourg and Hong Kong in the coming weeks, with Singapore slightly later and other countries following later in 2024 and next year. UBS expects to migrate 1.3 million clients overall, Dargan said.

"This is the largest migration of data as part of an M&A transaction in financial services, if not the biggest overall," he added. "Overall, we are bang on target in terms of technology integration."

Investors have been pleased with how the biggest banking takeover since the global financial crisis is proceeding. UBS shares have gained nearly 56% in value since the takeover of Credit Suisse was announced in March 2023.

But the IT integration is fraught with risks, given its complexity and the enormity of the client base and data transfers.

Previous banking deals have shown how hard integrations can be, with Deutsche Bank's takeover of Postbank taking far longer than expected, with glitches locking customers out of their accounts for weeks.

For Credit Suisse, UBS is migrating 110 petabytes of data, with each petabyte equivalent to 500 billion pages of printed text, enough to fill 20 million large filing cabinets.

Credit Suisse had about 3,000 applications, 100,000 servers and 16 data centres. So far UBS has decommissioned roughly 560 applications, 13 petabytes of data and 40,000 servers, Dargan said.

"We are pretty much on target for applications and ahead on servers," he added.

Dargan, who is responsible for about 40,000 workers, said the bank would reduce the number of external contractors UBS uses in technology and operations, enabling it to keep the majority of Credit Suisse's permanent employees and lift the proportion of internal technology and operations staff to 85% from 60%.

UBS employed about 110,000 people at mid-year, though media reports have said that total headcount could fall to 90,000 once integration is complete in 2026.

(Reporting by Oliver Hirt Writing by John Revill Editing by Tommy Reggiori Wilkes, Jane Merriman and David Goodman)