UBS to slash 2,500 Swiss jobs

Feelings have run high at recent UBS shareholder meetings Keystone

Ahead of the bank's AGM in Zurich, UBS has announced plans to reduce its global workforce by more than 10 per cent, including 2,500 job cuts in Switzerland.

UBS, which made a loss of SFr20.9 billion in 2008, also estimates it will report a loss of almost SFr2 billion ($1.75 billion) in the first quarter of 2009, a company statement said.

“Despite some initial positive signs, UBS will close the first quarter with an overall outflow of net new money,” the bank said.

Switzerland’s largest bank, which has been hard-hit by subprime-related losses, says it will adapt its size to the changed market conditions and lower levels of business.

UBS says it is planning cost savings by the end of 2010 of approximately SFr3.5 to SFr4 billion francs compared with 2008 levels.

The group employs 76,200 people worldwide and it intends to reduce this number by 8,700 by the end of next year. “Major job cuts are unfortunately unavoidable,” it said.

Of the 2,500 jobs to go in Switzerland, UBS estimates that there will be up to 1,500 redundancies, with the remainder achieved on a natural attrition basis.

Net outflow

The business division Wealth Management and Swiss Bank recorded a net outflow of approximately SFr23 billion.

This outflow was mainly recorded after the announcement of the settlement with US authorities investigating tax fraud by UBS clients.

UBS admitted in February that it had helped US clients conceal assets from their government in order to avoid taxes. The bank paid a $780 million fine, and disclosed the names of some of the clients involved. The bank is resisting pressure to hand over the names of some 52,000 further US clients holding secret accounts.

The first UBS client charged with evading United States tax pleaded guilty in a Florida court on Tuesday. Robert Moran, a yacht company executive, faces up to three years in prison and $250,000 in fines.

Moran was the first UBS client to plead guilty. A second US citizen is scheduled to answer similar charges next week.

No “quick fixes”

The group’s new chief executive Oswald Grübel, will address the annual shareholders’ meeting later on Wednesday. “We know where we have to set to work. It will be a long road back to success without any quick fixes,” a script of his speech reads.

The loss in the first quarter of this year stems from various factors, according to UBS, including a negative contribution of some SFr3.9 billion due to losses on previously disclosed illiquid risk positions.

Another factor is the credit loss expenses and valuation adjustments on the last positions transferred to a fund controlled by the Swiss national bank.

Further details on the first quarter results, cost-saving measures and strategy will be published on May 5.

swissinfo with agencies

Key facts

First quarter 2009 loss estimated at SFr2 billion
Tier 1 capital ratio c. 10% at end March 2009
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 to 2008 levels
Job cuts from 76,200 to 67,500 by end 2010
2,500 jobs of 25,800 to go in Switzerland