UBS AG, battered by US$17.3 billion of first-quarter losses at its investment-banking unit, is to cut 5,500 jobs.
The reductions will include as many as 2,600 positions at the securities division, the company said yesterday. UBS had a net loss of 11.5 billion francs (US$10.9 billion) in the first quarter.
UBS fell as much as 5.6 percent in Swiss trading, the most in seven weeks, after clients withdrew more assets than they added. Chief Executive Officer Marcel Rohner said he expected "tough business conditions," which have caused US$38 billion of markdowns at the company, to continue.
The job cuts are on top of 48,000 reductions announced by the world's biggest banks and securities firms in the past year, Bloomberg News said. The measures will save about 3 billion francs a year, UBS, which had a 3.03-billion-franc profit a year earlier, said.
UBS fell 1.86 francs, or 5 percent, to 35.02 francs as of 11:08am yesterday in Zurich, valuing it at about 76 billion francs - half its value last year.
Rohner and board Chairman Peter Kurer told shareholders last month they planned to slim down the securities unit and focus on the wealth management franchise. The private bank had net new money inflows of 5.6 billion francs in the first quarter, while Swiss business banking and global asset management had 18.4 billion francs outflows.
Wealth creation
"We expect this difficult environment to remain and be characterized by a continuing unfavorable global economic climate, de-leveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity," Rohner and Kurer said in a statement yesterday. "The impact will affect all of our businesses and we are required to manage costs, resources and capacity very actively."
The bank cut 1,500 jobs in the investment bank at the end of last year. It brought in Jerker Johansson from Morgan Stanley as head of the investment bank in mid-March and has said it would put assets related to US residential real estate into a separate division that may be spun off later.
UBS plans to sell subprime and Alt-A mortgage assets to BlackRock by the end of June.
Johansson said yesterday that the job cuts will be at all levels. About 26 percent from fixed-income and 9 percent in investment banking and equities. UBS is also in talks to sell the municipal-bond business.
New York-based Citigroup Inc, which has suffered almost US$41 billion in writedowns and losses from the subprime crisis, cut about 15,200 jobs and Merrill Lynch & Co eliminated 5,220 positions.
UBS Chairman Marcel Ospel, who replaced half of the executive board since the losses began in 2007, stepped down last month. The bank got shareholder approval to raise 15 billion francs through a rights offer after receiving 13 billion francs to replenish capital from investors in Singapore and the Middle East in March.
Some investors are demanding a split of the investment bank from other units, said Bloomberg news.