Embattled Swiss bank UBS yesterday 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 CHF2 billion ($1.75bn, Dh6.44bn), incurred on illiquid assets that have now been isolated in 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 CHF4bn, 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 will include 4,000 jobs in its Wealth Management and Swiss Bank unit. They come on top of 11,000 job reductions that have been announced since October 2007.
The bank's new CEO 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 told shareholders.
Zuercher Kantonalbank analyst Andreas Venditti noted in particular that the bank's Tier 1 ratio, which was about 10 per cent at the end of March, would "fuel speculation of further capital raising". Analysts at Keefe, Bruyette & Woods described the bank's capital position as "less secure than many may have previously assumed".
Under new rules announced by Swiss regulators last year, UBS would by 2013 have to fulfill a minimum ratio – 16 per cent – that is up to twice as high as the international Basel II minimum requirement of eight per cent. UBS also said it has yet to stem an outflow of funds. Money outflow for the Wealth Management and Swiss bank division alone reached CHF23bn in the first quarter, but this was balanced by a CHF16bn inflow into its Wealth Management Americas unit.
"The outflow was mainly recorded after the announcement of the agreement for investigation into our cross-border activities for US clients," said Gruebel.
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