UBS to Axe 5,500 Jobs
Europe's biggest casualty of the credit crunch loses £5.6bn in the first quarter and warns financial markets will remain difficult
UBS, Europe's biggest casualty of the credit crunch, is to ax 5,500 jobs, with 2,600 facing compulsory redundancy in its stricken investment bank.
The Swiss bank lost Sfr11.54bn (£5.6bn) in the first quarter - mildly better than the Sfr12bn it indicated on April 1 - and warned that financial markets would remain difficult.
It confirmed it had written down Sfr19bn of assets, bringing the total so far to Sfr37bn, and said its global asset management business had seen net outflows of Sfr16.5bn.
But the biggest hit taken was in investment banking, where pre-tax losses were Sfr18.3bn compared with a profit of Sfr1.54bn a year earlier. Personnel costs dropped 44% as salaries and bonuses were slashed.
The bank, which has already shed 860 staff in investment banking, said the majority of the further 2,600 job-cuts would be compulsory redundancies. Elsewhere, it would use natural attrition and internal redeployment to achieve a further 3,000 - or 7% - reduction in its headcount.
The bank also said it has a preliminary deal with asset manager Black Rock to sell a $15bn (£7.6bn) portfolio of sub-prime mortgages, a clear signal the market for ailing US real-estate assets is becoming more liquid.
"We see clearly that there are sophisticated investors coming into this market, and this itself we view as strong support," chief executive Marcel Rohner said in a conference call with journalists.
UBS said it had reduced its exposure to the US sub-prime market by 60%. Rohner said: "We can see tangible effects as a result of our initial responses to the losses. While our exposure is still subject to swings in market conditions, we see market demand for these securities returning in certain areas and at the current level of valuations."
Once a paragon of caution, now a byword for recklessness, UBS has been forced to raise Sfr39bn in new capital, sack its long-standing chairman and several senior executives and radically reshape its board and risk management. But it still faces challenges for further change from activist investors led by Luqman Arnold, ex-CEO, now head of Olivant investment fund.
The Swiss bank lost Sfr11.54bn (£5.6bn) in the first quarter - mildly better than the Sfr12bn it indicated on April 1 - and warned that financial markets would remain difficult.
It confirmed it had written down Sfr19bn of assets, bringing the total so far to Sfr37bn, and said its global asset management business had seen net outflows of Sfr16.5bn.
But the biggest hit taken was in investment banking, where pre-tax losses were Sfr18.3bn compared with a profit of Sfr1.54bn a year earlier. Personnel costs dropped 44% as salaries and bonuses were slashed.
The bank, which has already shed 860 staff in investment banking, said the majority of the further 2,600 job-cuts would be compulsory redundancies. Elsewhere, it would use natural attrition and internal redeployment to achieve a further 3,000 - or 7% - reduction in its headcount.
The bank also said it has a preliminary deal with asset manager Black Rock to sell a $15bn (£7.6bn) portfolio of sub-prime mortgages, a clear signal the market for ailing US real-estate assets is becoming more liquid.
"We see clearly that there are sophisticated investors coming into this market, and this itself we view as strong support," chief executive Marcel Rohner said in a conference call with journalists.
UBS said it had reduced its exposure to the US sub-prime market by 60%. Rohner said: "We can see tangible effects as a result of our initial responses to the losses. While our exposure is still subject to swings in market conditions, we see market demand for these securities returning in certain areas and at the current level of valuations."
Once a paragon of caution, now a byword for recklessness, UBS has been forced to raise Sfr39bn in new capital, sack its long-standing chairman and several senior executives and radically reshape its board and risk management. But it still faces challenges for further change from activist investors led by Luqman Arnold, ex-CEO, now head of Olivant investment fund.
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