Swiss wealth manager UBS plans to cut 8,700 jobs as the firm estimates to report a loss attributable to shareholders of almost CHF2 billion in first quarter 2009.
In order to adapt its size to the changed market conditions and lower levels of business, UBS is planning cost savings by the end of 2010 of approximately CHF3.5 billion to CHF4 billion compared to 2008 levels.
UBS expects to reduce the number of its employees to about 67,500 in 2010. At the end of March 2009 UBS employed 76,200 people in over 50 countries. Some of these job cuts will be in Switzerland. It is also planning to exit high-risk and unpromising businesses.
UBS said that the first quarter loss stems from a negative contribution totaling roughly CHF3.9 billion due to losses on previously disclosed illiquid risk positions, credit loss expenses and valuation adjustments on the last positions transferred to a fund controlled by the Swiss National Bank. The outlook for remaining risk positions has not changed materially.
Despite this quarterly loss, UBS expects to have a tier one capital ratio of roughly 10% at the end of March 2009. Despite some initial positive signs, UBS will close the first quarter with an overall outflow of net new money. The business division wealth management and Swiss bank recorded a net outflow of approximately CHF23 billion.
This outflow was mainly recorded after the announcement of the settlements with the US authorities in connection with their investigations into our cross-border services for the US private clients. On the other hand, wealth management Americas recorded a positive result, with net new money of around CHF16 billion, said UBS.
