UBS slashes thousands of jobs to cut costs
The embattled Swiss bank, UBS, is to cut a further 8,700 jobs worldwide including 2,500 in Switzerland, while reporting a substantial first-quarter loss.
The country’s largest financial institution announced a loss of almost SFr2 billion ($1.75 billion), mainly due to writedowns and outflows at its prestigious wealth management unit.
The bank’s annual shareholders’ meeting heard that major job cuts were “unfortunately unavoidable”.
“Unfortunately I am not able – as yet – to offer you any good news,” said UBS chief executive Oswald Grübel told about 5,000 UBS investors.
“Instead I am forced to present you with another round of unsatisfactory performance figures and to announce further drastic measures.”
The job cuts represent 11 per cent of the UBS workforce.
Grübel said the bank’s outlook remained “cautious” and UBS faced many uncertainties.
“We have to prepare ourselves for this even though we are entitled to be very optimistic about the longer-term prospects for our bank.”
Some analysts were not impressed by the cost-cutting measures.
“Cost-cutting is always a sign of weakness. It means you cannot generate profit,” said Kepler Equities’ analyst Dirk Becker. “It will take several quarters to rebuild the bank.”
UBS expects to reduce the number of its employees to about 67,500 in 2010. At the end of March 2009 UBS employed 76,200 in over 50 countries, the statement said. The aim is to save up to SFr4 billion.
The new cuts come on top of thousands already announced during the financial crisis and mean UBS will have shrunk its workforce by almost a fifth from a headcount peak of 83,800 a year ago.
Switzerland hit hard
Switzerland will be particularly hard hit by the measures, with between 1,200 and 1,500 redundancies out of the 2,500 jobs to go.
Last year, UBS had already cut 1,500 jobs in the country, with a total staff in its home market of 26,500 at the end of last year.
The Swiss Commercial Employees’ Association said it had received the news “with great regret”, adding that staff were paying a heavy price for the bank’s “erring ways”.
The Swiss finance ministry commented that it was painful for both bank staff and their families but it said the step was necessary.
Spokesman Roland Meier said the bank had to get its costs under control and as a result the measures were unavoidable.
Huge 2008 loss
In 2008 UBS posted a SFr20.9 billion full-year loss, the biggest ever for a Swiss company.
The first-quarter loss follows about SFr3.9 billion of losses on illiquid assets and SFr23 billion francs of outflows at the bank’s wealth management and Swiss bank division.
UBS has been the target of a United States tax fraud investigation alleging it had helped rich US clients hide untaxed money in Swiss accounts and Grübel said the outflows accelerated after the bank agreed in February to pay a $780 million fine.
But the onshore wealth management business in the US performed well, with net new money amounting to SFr16 billion in the first quarter.
Gruebel said investment banking, which is to blame for most of UBS’ losses, would continue to be a necessary business for the bank alongside its core wealth management division.
He also said UBS would make big cuts in marketing, sponsorship and external consultants and support and would also make significant savings by cancelling certain employee benefits, mostly at the management level.
An icon of Swiss banking, UBS came to the verge of collapse in October and was forced to ask the Swiss state for help.
Bern gave it a cash injection of SFr6 billion Swiss and the Swiss National Bank agreed to absorb into a special fund some of UBS’ toxic assets now amounting to $40 billion.
swissinfo with agencies
First quarter 2009 loss estimated at SFr2 billion
Wealth Management & Swiss Bank net outflow: SFr23 billion
Wealth Management Americas net new money: SFr16 billion
Cost savings of SFr3.5 to SFr4 by end of 2010 compared with 2008 levels
Job cuts from 76,200 to 67,500 by end 2010
2,500 jobs of 25,800 to go in Switzerland
Kaspar Villiger was nominated for the UBS chairmanship shortly after Oswald Grübel became CEO. He was confirmed by an overwhelming majority of shareholders (98%) at their annual meeting on April 15.
Villiger, who replaces Peter Kurer, was born on February 5, 1941, into a manufacturing family, which produced cigars and bicycles.
After studying engineering at Zurich’s Federal Institute of Technology, he joined the family firm, Villiger and Sons, which he managed together with his brother Heinrich.
He entered local politics in 1972 in the cantonal parliament of Lucerne. Ten years later, Villiger entered the federal House of Representatives and moved onto the Senate in 1987.
In 1989 he was named defence minister and switched to finance minister in 1985, a position he held until 2003. He held the rotating Swiss presidency in 1995 and 2002.
After leaving politics, Villiger joined the boards of Nestlé, Swiss Re and the Zurich newspaper NZZ. He will now stand down from these posts. His annual salary as UBS chairman will be SFr850,000.
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