UBS to cut 5,500 jobs next year

"These job cuts will be carried out largely in the United States, followed by Great Britain," Rebeca Garcia, a UBS executive told Business Standard, arguing that the impact on Asia-Pacific will be minimal. She said within Asia-Pacific, Hong Kong and Singapore will face some job cuts. A chunk of downsizing is going to take place in the investment banking, she said.

Several banking giants, including investment banks, had announced down-sizing of workforce to the tune of about 50,000 since the disastrous financial developments, which claimed write-downs and losses of about $320 billion, analysts said.

Battered by unstoppable hits from the raging sub-prime fires, the much-criticised Swiss bank said its net losses mounted to $10.9 billion in the first quarter as compared to a profit of about $3 billion in the same period last year.

Though the first quarter loss was slightly better than the bank's earlier forecast of well over $11 billion, UBS continues to remain jittery about unfolding developments in the financial markets, analysts said.

It announced plans to vacate from the grim municipal bonds business and sell about $15 billion in crumbling mortgage assets. These developments pushed UBS shares by 5.6% in Swiss trading yesterday.

"We expect this difficult environment to remain and be characterised by a continuing unfavourable global economic climate, de-leveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity," the bank's CEO Marcel Rohner and Chairman Peter Kurer told shareholders during a stormy meeting last month.

Up until now, UBS was forced to accept $38 billion in write-downs since the turbulent credit and liquidity crunch intensified after the first round of shocks from the sub-prime crisis in November last year.

Last year, it cut 1,500 jobs in its investment banking division, which is at the core of the losses and write-downs suffered by UBS. It appointed a new head Jerker Johansson from Morgan Stanley to set the house in order.

He announced yesterday that most of the cuts will be in its fixed-income business, while the investment banking division will be eventually reduced to 18 per cent below its peak last year.

"The biggest bank in Switzerland is almost bleeding to death and has to raise capital," Dieter Winet, a senior portfolio manager at Swisscanto Asset Management, told Bloomberg.