Swiss bank UBS to cut 8,700 jobs
Switzerland’s biggest bank announces the second major job cut in 18 months after posting new losses of CHF 2 million for the first quarter.ZURICH – Embattled Swiss bank UBS on Wednesday said it would slash 8,700 jobs in a bid to cut costs after it reported fresh losses for the first three months of this year.
Switzerland's biggest bank said its losses for the first quarter reached about CHF 2 billion (EUR 1.32 billion), incurred on illiquid assets that have now been transferred to a fund created by the Swiss National Bank.
UBS has been struggling to recover after losing billions in the financial crisis. In order to make "substantial cost savings" of up to four billion francs, the bank said it would make thousands more redundant.
"Major job cuts are unfortunately unavoidable. UBS expects to reduce the number of its employees to about 67,500 in 2010," said the bank, which employed 76,200 people at the end of March.
The latest round of cuts comes on top of 11,000 job cuts which have been announced since October 2007.
The bank's new chief executive, Oswald Gruebel, warned that UBS was not out of the woods.
"You should not assume that this will bring about a marked improvement in our results as early as the next few quarters. Our outlook remains cautious and we face many uncertainties," he said in a speech to shareholders during the bank's annual general meeting.
The bank's shares tumbled 8.67 percent at opening, before regaining ground at 0800 GMT, when it was trading down 2.6 percent at CHF 12.94. The overall Swiss Market Index was trading down 0.17 percent.
Zuercher Kantonalbank analyst Andreas Venditti noted that the share gained over 15 percent Tuesday, but that the climb was "not sustainable".
The bank's Tier 1 ratio, which was around 10 percent at the end of March, would "fuel speculation of further capital raising," he said.
The ratio is a measure of capital adequacy or financial strength. Under new rules announced by Swiss regulators last year, UBS would by 2013 have to fulfil a ratio that is up to twice as high as the international minimum requirements.
While the international Basel II accord has a minimum capital ratio set at 8.0 percent, the new Swiss rules would require the banks to raise the ratio to 16 percent.
UBS also said it has yet to stem an outflow of funds, as its net money outflow for the Wealth Management and Swiss bank division reached CHF 23 billion in the first quarter – largely due to a US clampdown on tax evasion.
"The outflow was mainly recorded after the announcement of the agreement in connection with the investigation into our cross-border activities for US clients," said Gruebel.
UBS is still facing a US government lawsuit to recover the details of 52,000 US customers suspected of tax offences. The bank was forced to pay USD 780 million (EUR 589 million) to US justice authorities in February to settle other charges of assisting tax fraud.
Pointing to attempts by countries to clamp down on tax cheats, Gruebel said UBS was "under particularly close scrutiny in this regard".
"The operating conditions for cross-border wealth management will change, and this will affect how our clients act. We shall make sure that this does not catch us unprepared," he said.
Meanwhile the group's nominated chairman Kaspar Villiger warned against "extreme" public pressure on high executive pay, saying that the bank was starting to lose out in recruiting the best as it trims costs.
Salaries at UBS have "fallen more than the competition's," said Villiger in a speech to be delivered during the shareholders' meeting.
"But we're seeing increasing evidence that we’re starting to lose our competitive edge with regard to recruiting the best of the best.
"This should be a message to those who think the bank should take more extreme measures," he added.
AFP / Expatica