7500 more jobs to go at struggling Swiss bank

UBS brings out the axe again as it reports a $3 billion loss for the first quarterby Elena LogutenkovaUBS, in common with every other financial institution, is looking

to cut costs.Andy Lynch, Schroder Investment Management
UBS, Switzerland's biggest bank, is to cut 7500 more jobs after reporting a loss and outflows of client funds in the first quarter.

The Zurich-based bank announced yesterday that it was reducing the number of employees globally to 67,500 in 2010 from the previous target of 75,000.

UBS lost almost 2 billion Swiss francs ($3 billion) in the first quarter.

Chief executive Oswald Gruebel, who was called out of retirement in February, told employees last month that they would have to face cost cuts as he tries to make the bank financially independent from the Government amid an "icy headwind" from market turmoil.

UBS, which has racked up more credit-related writedowns than any other European bank, has raised more than US$32 billion ($55.3 billion) from investors including the Swiss Government. It has also cut 11,000 jobs in the past 18 months.

"It's back to basics," said Andy Lynch, who helps to manage about US$5 billion at Schroder Investment Management in London. "UBS, in common with every other financial institution, is looking to cut costs" and would probably cut back in trading while focusing on its "private banking heritage".

UBS has fallen 11 per cent this year in Swiss trading, cutting the company's market value to 38.9 billion Swiss francs.

That compares with a 2.1 per cent gain in the 65-member Bloomberg Europe Banks and Financial Services Index.

Financial institutions worldwide have announced almost 300,000 job cuts since the beginning of the credit crisis as writedowns and losses swelled to US$1.3 trillion.

Goldman Sachs chief financial officer David Viniar said yesterday the US bank remained "cautious about the near-term outlook" after reporting a first-quarter profit that exceeded the most optimistic Wall St estimates, helped by trading in fixed-income, currencies and commodities.

UBS last month posted a loss of 20.9 billion Swiss francs for 2008, the biggest ever by a Swiss company, and said it remained "extremely cautious" about the outlook for this year.

The bank has amassed more than US$50 billion in writedowns and losses since the beginning of the financial crisis. At the end of March it employed 76,200 people.

Gruebel hired Ulrich Koerner this month as chief operating officer to cut administrative expenses, tapping a former colleague who helped him to turn around Credit Suisse Group AG six years ago.

UBS said yesterday it would eliminate about 240 jobs from its wealth management unit in the Asia-Pacific region, about 3 per cent of the staff in the area.

Shareholders at the UBS annual investor meeting in Zurich will vote on a proposal to appoint former Finance Minister Kaspar Villiger as chairman of the board of directors. He will replace Peter Kurer, who quit after a year amid a probe into whether UBS helped wealthy Americans to evade taxes.

The bank will also ask shareholders for permission to increase share capital by as much as 10 per cent if necessary.

Michel Demare, Ann Godbehere and Axel Lehmann will also be nominated as directors. Demare has been CFO of ABB, the world's largest builder of power grids, since 2005. The British Government installed Godbehere as CFO of Northern Rock after nationalising it last year. She is a former CFO of Swiss Reinsurance Co. Lehmann is chief risk officer of Zurich Financial Services.

- BLOOMBERG