|Business Home > Nation|
UBS looks set for 10,000 job cuts
Bradley Keoun and Elena Logutenkova (Bloomberg) / 28 October 2012
UBS, Switzerland’s largest bank, will cut as many as 10,000 jobs companywide as the trading business shrinks, a person with knowledge of the plan said.
Many of the reductions will come in the trading businesses overseen by investment-bank co-head Carsten Kengeter and probably will occur over several quarters, said the person, who requested anonymity because the plans haven’t been publicly announced. An announcement may come when UBS reports third-quarter earnings on Tuesday, the person said.
Chief executive officer Sergio Ermotti, 52, is overhauling the bank as Swiss regulators pressure UBS and Credit Suisse Group to boost capital and scale back trading and investment-banking operations. Like rival securities firms, UBS has been struggling to boost profitability as client activity and trading remain sluggish. “It was a loser’s game for them,” said Terry Connelly, former dean of the Ageno School of Business at Golden Gate University in San Francisco and an ex-managing director at Salomon Brothers Inc. “It wasn’t their fault, they simply tried climbing the wrong mountain.” High fixed costs and weak demand have made it harder to be profitable, and the industry will have to shrink more, he said.
Ermotti told his staff in a memo this month he’ll do whatever it takes “to tackle the current challenging market environment and paradigm shift” in banking and will continue “remodeling” UBS. He said in July that the market environment has completely changed since the firm announced reorganisation plans for the securities unit in November.
“UBS is a microcosm for the industry,” Mark Williams, a lecturer at Boston University’s School of Management, said in an interview. “The banking business model is changing and we’ve got to look at cost structure, we’ve got to look at compensation, and we’ve got to readjust.”
The bank had about 63,250 employees as of June 30, according to its most recent financial report, which means the staff cut could equal 16 per cent. UBS is reducing risk-weighted assets at the investment bank by more than half from September 2011 levels, mostly in fixed income.
The staff cuts were reported earlier by the Financial Times. The eliminations will lead to changes in senior management and reduce costs in the bank’s support functions including information technology, the FT said.
Serge Steiner, a spokesman for the bank, declined to comment. Since taking office last year, Ermotti has been working to cut production costs across all of the bank’s businesses.
|comments powered by Disqus|
|Opinion & Analysis|