UBS may cut 8,000 jobs on losses
UBS AG may cut as many as 8,000 jobs as it grapples with the biggest credit writedowns of any European bank and a 12 billion-franc ($11.4 billion) first-quarter loss.
Switzerland's biggest bank, which had a 3 billion-franc profit a year earlier, is set to spell out plans for layoffs when it reports detailed results today. The company will probably say it's eliminating between 2,500 and 3,000 jobs in its investment bank, more than 10 percent of the division, two people familiar with the matter said on May 2.
"UBS is scaling down investment banking," including reducing trading bets and giving up off-balance sheet units, said Frankfurt-based Landsbanki Kepler analyst Dirk Becker, who advises clients to "reduce" holdings of UBS. It is "realistic" to estimate that the company will fire one tenth of its 83,000 employees overall, he said.
Writedowns at the Zurich-based bank after the US subprime mortgage meltdown have swelled to $38 billion over the past three quarters, a result of building a debt securities business at the peak of the market. Chairman Marcel Ospel, who replaced half of the executive board since losses began in 2007, stepped down last month. UBS already cut 1,500 jobs late last year.
UBS lost 51 percent in Zurich trading in 12 months through May 2, making it the fifth-worst performer in the Bloomberg Europe Banks and Financial Services Index of 59 stocks.
It got shareholder approval last month to raise 15 billion francs through a rights offer after receiving 13 billion francs from investors in Singapore and the Middle East in March.
"They've got to do something to win back the trust of shareholders," said Peter Thorne, an analyst at Helvea in London with an "accumulate" recommendation on the shares. "I wouldn't be surprised if it's more" than 8,000 layoffs, he said. New York-based spokesman Doug Morris declined to comment.
The world's biggest financial companies have announced more than $319 billion of writedowns and loan losses, with UBS in second place behind New York-based Citigroup Inc, which has written down $41 billion.
Agencies
(China Daily 05/06/2008 page17)
