UBS to cut 8,700 jobs

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The Independent Online

UBS will cut another 11 per cent of staff, its new chief executive said today, warning that Switzerland's largest bank still faces an uncertain future.

Chief Executive Oswald Gruebel, the veteran former Credit Suisse boss pulled out of retirement to get UBS back into shape, said the bank will post a first-quarter loss of nearly 2bn Swiss francs at its prized wealth management unit.

He wants to cut staff to 67,500 in 2010 from 76,200 at the end of March in a bid to save up to 4bn francs.

The new cuts come on top of thousands already announced during the crisis and mean UBS will have shrunk its workforce by almost a fifth from a head count peak of 83,800 a year ago.

"Unfortunately I am not able - as yet - to offer you any good news. Instead I am forced to present you with another round of unsatisfactory performance figures and to announce further drastic measures," Gruebel told nearly 5,000 UBS investors gathered for the bank's annual shareholder meeting.

"Our outlook remains cautious and we face many uncertainties. We have to prepare ourselves for this even though we are entitled to be very optimistic about the longer-term prospects for our bank," he said as shareholders of the world's largest wealth manager listened in respectful silence.

UBS shares, which rallied yesterday on expectations of big job cuts, fell sharply at the opening but then recouped some of their losses to trade down 3.4 percent at 12.82 Swiss francs at 0859 GMT. The DJ Stoxx European banking index was flat.

"The result is a huge disappointment. After the unexpectedly good figures from Goldman Sachs and Wells Fargo and optimistic comments from Deutsche Bank about the first months, we were expecting at least a flat result from UBS," one trader said.

About 2,500 jobs would be axed at UBS' home Swiss division, which employed above 26,000 people at the end of 2008.

In an internal memo to staff obtained by Reuters, UBS said 4,000 jobs would go in wealth management and the Swiss bank, down from about 49,500 at the end of 2008, although some of those cuts had already happened during the first quarter.

The biggest savings would come from middle and back offices as the bank moves to share services across divisions, it said.

"Cost-cutting is always a sign of weakness. It means you cannot generate profit," said Kepler Equities' analyst Dirk Becker. "It will take several quarters to rebuild the bank."

While UBS's previous top managment had said they aimed to return the bank to profitability this year, Gruebel gave no time frame other than saying it was his "most urgent task".