UBS, the embattled Swiss bank, said on Tuesday that it would cut 3,500 jobs over the next two and a half years to reduce costs.
About half of the job cuts will be in the investment banking division, which has continued to be one of the worst-performing units of the bank. The rest of the cuts are to come from the wealth management and asset management businesses.
The cost-cutting measures would incur one-time charges of about 550 million Swiss francs ($698 million), and most of it would be booked in the second half of this year, UBS said.
The measures were “designed to improve operating efficiency,” UBS, Switzerland’s biggest bank, said in a statement. “UBS will continue to be vigilant in managing its cost base while remaining committed to investing in growth areas.”
The announcement came after the bank’s chief executive, Oswald J. Grübel, said last month that he planned to cut 2 billion francs of costs after profit fell 50 percent in the second quarter, but he did not give more details at the time. The bank had also warned that it would miss its earnings target set two years ago because a weaker economic outlook was expected to curb profit.
UBS said on Tuesday that about 45 percent of the 3,500 job cuts would come from its investment banking unit, which had repeatedly reported dismal figures and failed to fully recover from huge losses during the subprime mortgage crisis.
Some analysts had criticized UBS for lacking a clear strategy for the investment banking unit and questioned just how big the business should be within UBS.
Efforts by Carsten Kengeter, the former Goldman Sachs manager in charge of the investment banking unit, to overhaul the division were hampered recently by a string of departures among senior bankers. Mr. Grübel said in February that the unit’s performance was unsatisfactory and threatened to reduce it if revenue did not recover.
Other banks have announced job cuts recently in light of falling earnings as clients prefer to reduce risks amid concerns about a deteriorating global economy.
HSBC plans to cut 30,000 jobs, Credit Suisse said it would cut 2,000 positions and the Lloyds Banking Group is in the process of eliminating 15,000 jobs.
Profit at UBS fell to 1 billion francs in the three months through June, from 2 billion francs in the period a year earlier. Pretax profit in the investment banking unit slumped to 376 million francs from 1.3 billion francs.
Article source: http://feeds.nytimes.com/click.phdo?i=6d984f78deb29dbd34deb868dcec3a10
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