UBS plans to shed 5,500 jobs amid market turmoil

UBS, the embattled Swiss financial giant, has announced 5,500 job losses as the bank's woes continue to take a toll on its core wealth management business.

The cuts, which total about 7 per cent of the bank's workforce, include about 2,600 at the investment banking business that has plunged UBS into turmoil.

The investment banking cuts will be compulsory but UBS said it hoped other reductions could be made through unforced departures and moving people to other jobs. Casualties in London are said to number fewer than 700. The reductions come on top of 1,500 investment-banking job cuts already made.

UBS is the biggest casualty of the credit crunch among major European banks. Massive writedowns of more than $37bn (£18.8bn) have cost the jobs of its chief executive, Peter Wuffli, and the chairman, Marcel Ospel. The bank has raised about 39bn Swiss francs (£18.8bn) in capital to reassure wealthy clients that it is a safe institution.

UBS said its tier-one capital ratio at the end of the first quarter was a strong 11.8 per cent, and that it did not need to raise more capital. But its problems appeared to deter wealthy clients from giving it business.

Net new money at UBS's wealth management business was SFr5.6bn. But clients in Switzerland, where confidence has been rocked by the bank's ills, withdrew a net SFr1.9bn in the first quarter. Swiss business banking and global asset management had SFr18.4bn of outflows. The bank said that its performance was affected by general market conditions such as the weak dollar and lower wealth generation.

UBS announced a deal with BlackRock, the US asset manager, to sell $15bn of mortgage securities in what it said was a sign that the market for distressed assets was recovering.

"The same is true for UBS as for the entire sector: the worst is likely over," said analysts at Wegelin, the Swiss bank. "However, there is little momentum for the future. Even if job cuts are able to lower costs, the current outlook is anything but rosy."

UBS reported a first-quarter loss of SFr11.535bn, slightly below analysts' expectations. The shares closed down 4.5 per cent at SFr35.22.

In a further blow to Swiss financial services, Swiss Re, the world's biggest reinsurer, made fresh credit write-downs of SFr819m. Swiss Re has been hit hard by the credit crisis, notching up write-downs at its financial services unit, which creates products to transfer risk to capital markets.

Top banker held in US tax probe

The head of UBS's wealth management business for the Americas, Martin Liechti, was detained as part of a tax fraud investigation when he passed through Miami airport last month. The Department of Justice is looking into whether UBS helped its private clients to hide investments outside the US and illegally avoid US taxes. Mr Liechti, who is based in Zurich, has been told not to leave the US because he is a "material witness" to the investigation. UBS declined to confirm that the person detained was Mr Liechti. In a statement last night, the bank said: "Our understanding is that the respective employee, who has not been charged with any wrongdoing by the US government, will remain in the US pending discussions with the authorities regarding reso-lution of his status as a witness."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea