UBS To Slash 5,500 Jobs; Records $11 Billion Loss

UBS To Slash 5,500 Jobs; Records $11 Billion Loss

By KATHARINA BART
May 6, 2008 1:41 a.m.

ZURICH -- UBS AG said Tuesday it plans to cut 5,500 jobs by the middle of next year, an effort meant to restructure the Swiss giant's troubled investment bank.
The Zurich-based bank will axe 2,600 investment banking jobs mainly in London and New York after massive write-downs on dud mortgage securities, totaling over $37 billion. The remainder will be cut through natural attrition across the across the
bank's units, UBS said. Alongside the job cuts, UBS said it swung to a first-quarter net loss of 11.54 billion Swiss Francs ($10.99 billion), from a 3.03 billion francs net profit in the year-ago period.
In its outlook, UBS, which is reportedly in talks over the mortgage positions it still holds, cautioned that market conditions remain tough.
The major losses and subprime write-downs have led UBS to rethink its investment bank, clamping down on risk, shrinking its balance sheet, and abandoning some of the high-stakes areas such as proprietary trading.
The losses have forced UBS to seek two massive injections of fresh capital this year, one from major investors and one as a capital increase from shareholders to help cover the losses.
The bank, which has swept its management ranks in recent months because of the losses, has also come under fire from activist shareholder Olivant Advisers Ltd. Olivant, a 1.1% shareholder, is urging UBS to consider asset disposals or a split-up to protect its flagship private bank.
At the private bank, which caters to the financial needs of wealthy individuals, inflows of fresh funds slowed dramatically. While the private bank garnered CHF5.6 billion in fresh funds -- a closely-watched gauge of future business -- the bank overall posted outflows of CHF12.8 billion, as money left both the asset management and business bank units.
UBS shares have slid 26% thus far this year, underperforming by far the Dow Jones Stoxx 600 bank index, which has edged 8.3% lower in the same period.
UBS shares closed at 36.88 francs Monday.