UBS to axe 5,500 jobs
UBS AG, battered by $17.3 billion of first-quarter losses at its investment-banking unit, plans to cut 5,500 jobs and said clients withdrew a net $12.2 billion from its asset- and wealth-management divisions.
The headcount reductions, which amount to about 7 percent of the workforce, will include as many as 2,600 positions at the securities division, the company said in a statement yesterday. The bank also said it plans to exit the municipal bond business and sell $15 billion in distressed assets to a newly created fund managed by BlackRock Inc. UBS had a net loss of 11.5 billion francs ($10.9 billion) in the first quarter.
UBS fell as much as 5.6 percent in Swiss trading, the most in seven weeks, after clients withdrew more assets than they added for the first time in almost eight years. Chief Executive Officer Marcel Rohner told analysts he expects "tough business conditions", which already caused $38 billion of markdowns at Switzerland's biggest bank, to continue.
"The bank's reputation is tarnished," said Dieter Winet, a senior portfolio manager who helps oversee 63 billion francs at Swisscanto Asset Management in Zurich. "They pointed out some problems in private banking, which is their last jewel. The other two divisions have even bigger problems, as one nearly drove UBS to bankruptcy."
Pretax profit at the wealth management and business banking unit fell 1.7 percent to 2.15 billion francs, while profit from asset management slumped 17 percent to 330 million francs. The 18.2 billion-franc loss at the securities unit compares with a profit of 1.54 billion francs a year ago.
The job cuts are on top of 48,000 reductions announced by the world's biggest banks and securities firms in the past year, as writedowns and losses from the US subprime crisis swelled to $319 billion.
Agencies
(China Daily 05/07/2008 page17)
