Strategy
UBS To Shed Around 3,500 Jobs; Wealth Management To Be Hit
UBS said today it will shed around 3,500 jobs, of which 45 per cent will come from the wealth management side of its business - including the Americas - as it moves to deliver on a SFr2.0 billion (around $2.53 billion) reduction in expenses.
Switzerland’s largest bank said the announcement was an update on plans to cut expenses by the end of 2013 and were consistent with its statement on 26 July this year when it also issued second-quarter results.
The job cuts will be achieved by a mix of redundancies and “natural attrition” as well as further “real estate rationalisation”.
The Zurich-listed firm said it expected to book restructuring charges of around SFr550 million as a result of the cost-cutting plans, of which around SFr450 million will be booked in the second half of this year. The “substantial majority” of the expected SFr450 million charge will be recognised in the third quarter of 2011.
As for other business lines besides wealth management, around 55 per cent of restructuring charges will be incurred by the investment bank, 30 per cent in Wealth Management & Swiss Bank, 5 per cent in Wealth Management Americas and 10 per cent in Global Asset Management.
Of the expected 3,500 staff reductions, approximately 45 per cent will come from the Investment Bank, 35 per cent from Wealth Management & Swiss Bank, 10 per cent from Global Asset Management, and 10 per cent from Wealth Management Americas.
Last month, UBS said the bank is unlikely to meet its mid-term profit targets. The bank, like its peers such as Credit Suisse and Julius Baer, has been hit by the strength of the Swiss franc, as this hits non-Swiss earnings when converted into the national currency. Such banks have also had to restructure their businesses to take account of increased international pressure against Swiss-based offshore bank accounts.
Bank margins have been squeezed also by developments such as low deposit rates and rising regulatory compliance burdens. According to Scorpio, the consultants and research organisation, wealth managers around the world had an average cost/income ratio of almost 80 per cent last year, a slight increase.
