UBS slashes 2,000 more jobs

UBS chairman Peter Kurer did not mention the job cuts at a shareholders meeting on Thursday Reuters

Switzerland's largest bank has announced it will cut 2,000 investment-banking jobs and close its commodities business.

The move comes just one day after an extraordinary meeting in Basel, where executives assured shareholders that UBS had a plan in place to recover from recent losses totalling $43 billion (SFr49 billion).

UBS officials had made no mention of the additional cuts, but media speculation had suggested the move, which was confirmed by the bank on Friday, was likely.

UBS said it would continue to advise its investment bank clients and provide access to markets, but executives said months of weathering tumultuous financial markets had forced them to redefine their priorities.

“While the revenue outlook is uncertain, these measures will allow us to focus on our strengths, reduce the cost base to a more sustainable level and position our core businesses for growth once fundamentals improve,” Jerker Johansson, chief executive of UBS’s investment bank said on Thursday.

“Sensible move”

The recent cuts bring the total number of UBS jobs lost to 6,000.

Most of the cuts just announced would be in the United States and Britain and would come before the end of the year. By that time the bank plans to have reduced its investment-bank workforce to 17,000 people.

Executives said they plan to retreat from services in real estate, property trading and commodities like precious metals and raw materials.

“Looking at the markets it was very clear they would reduce these businesses dramatically, so it is not a huge surprise,” Zurich Cantonal Bank analyst Andreas Venditti told swissinfo.

“Maybe some market participants would have expected further moves, but under the present market conditions it is the sensible thing to do.”

At the shareholders meeting on Thursday, chairman of the board Peter Kurer said the bank was poised to turn in a profit in the third quarter of 2008 and for the full year of 2009.

He did warn, however, that “some issues will not be fixed overnight”.

Cautious optimism

Venditti agreed that UBS was likely to return to the black next year, but warned that volatile markets might yet hamper the bank’s turnaround strategy.

“They are ahead of the field compared to other banks who have failed to reduce their [bad debt] positions in the same way,” he said.

“But the market environment is very weak and they did not say anything about net new money flows, which will remain negative for sure.

“Not everything is positive and not all the problems have all disappeared.”

swissinfo with agencies

UBS Woes

UBS endured a tough 2007 and has been in no better shape in 2008 as a result of the US subprime mortgage crisis.

In July 2007, chief executive Peter Wuffli stepped down following the collapse of the bank’s hedge fund Dillon Read Capital Management.

In October 2007, UBS said it would cut 1,500 jobs in its investment banking arm, including that of its head Huw Jenkins. Chief financial officer, Clive Standish, left at the same time.

UBS has written down some $43 billion as a result of the subprime mortgage market collapse. Chairman Marcel Ospel stepped down in April.

The bank was then investigated for allegedly helping US citizens evade taxes, following a confession from a former employee. The case led to UBS stating it would stop offshore banking activities in the US.