ZURICH - UBS Group plans to cut 3,000 jobs in Switzerland in the next couple of years, as it offered the first glimpse of how it plans to achieve more than $10 billion in cost savings after taking over Credit Suisse.

UBS also announced it would be keeping Credit Suisse's domestic bank - and the ensuing job losses are expected to result in a backlash in Switzerland.

The world's largest wealth manager could have spun off the business and floated it in an IPO but the domestic bank has been a solid profit-maker for Credit Suisse and last year it was the only division in the black.

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

He wrote in a memo to staff to said that 1,000 jobs redundancies will result from integrating Credit Suisse's domestic bank, while another 2,000 would result from the need to profoundly restructure Credit Suisse.

UBS shares were up 5% in morning trade, hitting highs not seen since 2008.

The prediction of over $10 billion in cost-savings by end 2026 compares with an earlier estimate of $8 billion by 2027. Most savings are set to come from reducing headcount.

Hanging on to existing Credit Suisse clients is seen as key if UBS is to successfully pull off the Herculean deal.

Credit Suisse reported net asset outflows of 39 billion Swiss francs ($44.4 billion) in the second quarter, underscoring that the rescue has failed to stem the loss of confidence in its franchise.

But UBS said the outflows took place at a slower pace compared to previous quarters and turned positive in June.

UBS's global wealth management reported net new money of $16 billion, its highest for the second quarter in over a decade.

The shotgun marriage to its fallen rival at the behest of Swiss authorities - the first-ever merger of two global systemically important banks - has created both opportunities and risks for UBS.

On one hand, analysts note that UBS acquired Credit Suisse for a song - just 3 billion Swiss francs - while gaining a large asset base, good client relationships and talented employees.

At the same time, analysts warn that the complexity and the hasty nature of the deal brings significant execution risks as UBS must aggressively cut jobs, shrink Credit Suisse's investment banking operations and manage outflows as clients seek to spread risk.

UBS booked net profit of $29 billion for the second quarter. Groupwide UBS results include just one month of Credit Suisse earnings as the deal only closed in June.

The bumper profit is due to a huge one-off gain that reflects how the acquisition costs were far below Credit Suisse's value. It was somewhat under a consensus estimate of $33.45 billion from a poll conducted by the bank.

($1 = 0.8784 Swiss francs)

(Reporting by Noele Illien; Writing by John O'Donnell; Editing by Edwina Gibbs)