UBS confirms 2000 job cuts
UBS said that as part of the continuing restructuring of its troubled investment banking division, which has been hit by crippling writedowns and is suffering from a slump in demand amid the current financial crisis, it will cut 2,000 jobs and exit several business lines.
"The crisis in the financial markets requires us to recalibrate our business," said Jerker Johansson, chairman and chief executive of UBS' Investment Bank, who joined the bank in March from Morgan Stanley. "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."
UBS said that amid the revamp it will cut the headcount at its investment bank division by around 10% to 17,000 employees. Since the outbreak of the US sub-prime-mortgage crises, which has cost UBS more than $40bn (€28bn) in writedowns, forcing it to take up $27bn of new capital in two separate hikes, UBS has cut more than 20% of its workforce at this division.
The bank, which said it will exit most of its commodities trading business and also substantially cut its real-estate securitisation and proprietary trading activities, will continue to build its equities operations and attempt to maintain its position in the advisory and capital markets segment. These segments, according to analysts, are considered to be less risky and have, in the past, helped UBS to churn out sustainable profits.
The revamp at the investment bank should help UBS to be profitable in 2009 after the bank posted a record loss in 2007 and is also likely to post a loss this year. In the first half of 2008, UBS posted a net loss of about Sfr11.8bn ($10bn).
"A right-sized investment bank, positioned alongside UBS' wealth management and institutional asset management business, will enable UBS to position itself as one of the core group of universal banks that are likely to dominate in this redrawn landscape," said Johansson.
UBS earlier this year flagged it will overhaul its entire banking operations and operate its three key divisions on a more independent basis in a bid to improve its capital management and get a better grasp on risks and costs. UBS' chairman earlier this week said the company will also redraw its remuneration and bonus policy to keep costs under control.
--Write to Goran Mijuk at goran.mijuk@dowjones.com
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