WORLD
UBS Said to Plan 10,000 Job Cuts, Investment Bank Shrinks
Baku, October 29 (AZERTAC). UBS AG (UBSN), Switzerland’s largest bank, will cut as many as 10,000 jobs companywide as the trading business shrinks, a person with knowledge of the plan said.
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland.
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland.
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland.
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland.
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong.
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong. Many of the reductions will come in the trading businesses overseen by investment-bank co-head Carsten Kengeter and probably will occur over several quarters, said the person, who requested anonymity because the plans haven’t been made public. An announcement may come when UBS reports third-quarter earnings on Oct. 29, the person said.
Chief Executive Officer Sergio Ermotti, 52, is overhauling the bank as Swiss regulators pressure UBS and Credit Suisse Group AG to boost capital and scale back trading and investment- banking operations. Like rival securities firms, UBS has been struggling to boost profitability as client activity and trading remain sluggish.
“It was a loser’s game for them,” said Terry Connelly, former dean of the Ageno School of Business at Golden Gate University in San Francisco and an ex-managing director at Salomon Brothers Inc. “It wasn’t their fault, they simply tried climbing the wrong mountain.” High fixed costs and weak demand have made it harder to be profitable, and the industry will have to shrink more, he said.
The investment bank has suffered lapses that shook Zurich- based UBS, the world’s second-largest wealth manager. Losses during the subprime crisis forced UBS to seek a bailout from the Swiss government in 2008 to help it spin off toxic assets. Last year a $2.3 billion loss from unauthorized trading led to the departure of CEO Oswald Gruebel.
“Investors want UBS to reveal the value of the asset and wealth management businesses, which will make 26 percent returns on our 2013 estimates, and downsize materially the investment bank, which struggles to make single-digit returns,” said Huw van Steenis, a London-based analyst at Morgan Stanley.