Swiss giant UBS says it will axe 3,500 jobs

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Switzerland's biggest bank UBS is to axe 3,500 jobs to shave 2bn Swiss francs (£1.5bn) off its annual costs as it joins rival investment banks in reversing the post-crisis hiring binge and preparing for a tough few years.

UBS said almost half the cuts would be in investment banking. It had already said it would cut jobs when it posted weak second-quarter profits last month as its fixed-income business underperformed.

Like its rival Credit Suisse, UBS has been grappling with rising regulatory costs and the soaring Swiss franc, which are eating into profits.

UBS, which had to be rescued by the state in 2008 after massive losses on toxic assets, slashed staff to about 64,000 from 78,000 before the financial crisis, but staff levels grew again in the last year to over 65,700.

Around 45 per cent of the cuts will come from UBS's investment bank, 35 per cent from its wealth management and Swiss bank business, 10 per cent from global asset management and 10 per cent from wealth management Americas.

Banks around the world are slimming down as weak investment trading this year looks set to continue, leaving many carrying high costs after hiring aggressively in 2009 and early 2010 when trading income surged following the financial crisis. Big increases in fixed salaries since the financial crisis, to compensate for tougher bonus rules, have also left banks with an inflexible cost base.

Fixed-income, currencies and commodities, which accounts for about half of investment bank industry revenue, has been hit particularly hard as bond trading has slumped.

Tougher regulation has added pressure to shrink balance sheets and exit some business areas. That has put more scrutiny on costs, which are seen as particularly high at Switzerland's top two banks.