UBS may cut 8,000 jobs after $11.4 billion loss

Switzerland's biggest bank, which had a 3 billion-franc profit a year earlier, is set to spell out plans for layoffs when it reports detailed results tomorrow.

The company will probably say it's eliminating between 2,500 and 3,000 jobs in its investment bank, more than 10 per cent of the division, two people familiar with the matter said May 2.

"UBS is scaling down investment banking," including reducing trading bets and giving up off-balance sheet units, said Frankfurt-based Landsbanki Kepler analyst Dirk Becker, who advises clients to "reduce" holdings of UBS. It is "realistic" to estimate that the company will fire one-tenth of its 83,000 employees overall, he said.

Writedowns at the Zurich-based bank after the US sub-prime mortgage meltdown have swelled to $38 billion over the past three quarters, a result of building a debt securities business at the peak of the market. Chairman Marcel Ospel, who replaced half of the executive board since losses began in 2007, stepped down last month. UBS already cut 1,500 jobs late last year.

UBS rose 20 centimes, or 0.5 per cent, to 37 francs by 9:01 a.m. in Swiss trading. It has lost 50 per cent in the past 12 months, making it the fifth-worst performer in the Bloomberg Europe Banks and Financial Services Index of 59 stocks.

The Swiss bank got shareholder approval last month to raise 15 billion francs in a rights offer after receiving 13 billion francs from investors in Singapore and West Asia in March.

Winning back trust
"They've got to do something to win back the trust of shareholders," said Peter Thorne, an analyst at Helvea in London with an "accumulate" recommendation on the shares. "I wouldn't be surprised if it's more" than 8,000 layoffs, he said. New York-based spokesman Doug Morris declined to comment.

The world's biggest financial companies have announced more than $319 billion of writedowns and loan losses, with UBS in second place behind New York-based Citigroup Inc, which has written down $41 billion. Banks and securities firms have cut about 48,000 jobs in the past 10 months, including 15,200 positions at Citigroup and 5,220 at Merrill Lynch & Co.

Credit Suisse Group, Switzerland's second-biggest bank, and Deutsche Bank AG, Germany's biggest, reported quarterly losses for the first time in five years for the three months ended in March. Credit Suisse had a 2.15 billion-franc loss after 5.3 billion francs in writedowns, while Deutsche Bank lost