Swiss bank UBS will cut 10,000 jobs as it exits from its fixed-income trading business and tries to cut costs and concentrate on wealth management.
The Zurich, Switzerland-based institution, which stated that it is “significantly reshaping its investment bank,” said it will bring its head count to 54,000 by 2015 from 64,000 employees currently. Some 2,000 cuts will come from UBS front-office workers who deal directly with clients.
In total, that’s a 16 percent slice off the overall workforce. At its height, UBS employed 83,500 workers in 2007. It was unclear Tuesday whether the cuts would affect employees in Maine.
The news of the coming job cuts revived an old joke that the name UBS stands for “U’ve Been Sacked,” as many said they only discovered they’d been laid off when their building security passes were deactivated, according to the Financial Times.
The bank plans to abandon its fixed-income segment, which it said was “rendered uneconomical by changes in regulation and market developments.” Instead, UBS said it will restructure to focus on its advisory, research, equities, precious metals and foreign-exchange sectors.
The three-year slim-down, part of a cost-cutting plan first announced last year, will help save 3.4 billion Swiss francs, or $3.6 billion, according to the bank. The effort will also involve shrinking UBS’s real estate footprint.
“The business model we are creating will be unique in the banking industry,” said Group Chief Executive Sergio P. Ermotti in a conference call with analysts. “UBS will be less capital- and less balance-sheet intensive, highly cash-flow generative, more focused on serving our clients and capable of maximizing value for our employees and shareholders.”
The institution, which along with its peers has had to contend with the European debt crisis, is trying to scale back its exposure to risk and adjust to tighter financial laws.
“The trend toward increased regulation for banks is not going away, although the rules are unlikely to be applied consistently around the world,” Ermotti said. “Higher capital and tighter leverage requirements will put pressure on banks’ returns for years to come and reduce the long-term profitability of investment banks as they are currently structured.”
UBS suffered a loss of 2.2 billion Swiss francs, or $2.3 billion, in its third quarter. During the same period a year earlier, the bank’s net income was 1 billion francs, or $1.1 billion.
The bank has also had to shield its reputation from the fallout of rogue trader Kweku Adoboli, who is accused of gambling away some $2.2 billion dollars. Adoboli told a London jury this week that he “lost control in the maelstrom of the financial crisis,” according to the BBC.
Distributed by MCT Information Services