UBS to axe 2,000 jobs

October 3, 2008

, ZURICH, October  3 – Switzerland\’s biggest bank UBS on Friday said it would axe another 2,000 jobs as it moved to shrink its investment bank which had been battered by the US subprime loan crisis.

The latest lay-offs would bring the staff levels in the investment bank unit to approximately 17,000 by the year-end, 6,000 less than the peak level in the third quarter of 2007, the bank said in a statement.

In all, the Swiss bank has trimmed 9,000 jobs, cutting its staff by 11 percent since June 2007.

UBS had been forced to write down more than 42.5 billion dollars worth of assets and post successive quarterly losses when the United States subprime mortgage market soured.

Its shares have been wildly volatile, plunging more than 10 percent this week as governments intervened to prop up several other European banks in the global fallout from a crisis sparked by US bank collapses.

The chairman and chief executive officer of UBS Investment Bank Jerker Johansson explained that the problems posed by the ongoing financial crisis "require us to recalibrate our business.

"While the revenue outlook is uncertain, these measures will allow us to focus on our strengths, reduce the cost base to a more sustainable level and position our core businesses for growth once fundamentals improve," he said.

Rumours had been swirling in the market that the bank would announce job cuts ahead of its extraordinary general meeting yesterday.

Instead, UBS announced that it has turned a corner, with its third quarter expected to yield small profits.

Thursday\’s announcement then gave a bounce to its shares.

The Swiss bank announced that its investment unit would cease dealing in commodities other than precious metals, and would "substantially downsize" real estate and securitization trading.

Analysts gave mixed views on the latest announcement.

Bank Vontobel\’s analysts said UBS is "further raising confidence levels" with its move to revamp the investment bank.

Exiting some businesses such as real estate and securitization trading is the "right strategy as this business will likely remain subdued for a very long time."

Zuercher Kantonalbank analysts said however that the changes to the investment bank were "not particularly surprising".

"As warned yesterday, we would further reduce our earnings estimates due to the ongoing market turbulences," said the Zurich-based bank.

Overall, investors appeared to welcome the news.

At 10:10 am (0810 GMT), UBS shares were up 3.29 percent at 22 Swiss francs, while the overall market was down 0.99 percent.

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