UBS to axe 8,700 jobs amid expected $1.7-billion Q1 loss

15 April 2009

Switzerland's biggest but troubled bank UBS, said today that it would axe 8,700 jobs to save cost in the face of an expected first-quarter net loss of nearly $1.75 billion.

Struggling with sub-prime mortgage related losses as well as facing securities fraud and tax evasion lawsuits in the US, (See: New York attorney general charges UBS with securities fraud) the Swiss banker says it will adapt its size to the changed market conditions and lower levels of business.

Releasing details today, prior to the annual shareholders meeting, UBS said that it seeks to realise substantial cost savings in all areas by the end of 2010 of approximately 3.5 to 4 billion francs compared with 2008 levels and major job cuts are unfortunately unavoidable.

UBS said in a statement, ''UBS estimates that it will report a loss attributable to shareholders of almost CHF 2 billion in first quarter 2009. The loss stems from a negative contribution totaling roughly CHF 3.9 billion due to losses on previously disclosed illiquid risk positions, credit loss expenses and valuation adjustments on the last positions transferred to a fund controlled by the Swiss National Bank. The outlook for remaining risk positions has not changed materially.''

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 people in over 50 countries. Some of these job cuts will come from its home country in Switzerland.

The Swiss bank has axed 11,000 jobs since October 2007 with the last round of job cuts coming in February, when the bank announced that it would cut another 2,200 jobs at its investment-banking arm and restructures its wealth management operations as it reported a hefty 8.1 billion Swiss francs ($7 billion) fourth-quarter loss. (See: $27-billion Q4 loss compels UBS to slash 2,200 investment-banking positions)