Zurich, April 15: UBS will post a first-quarter loss and cut 8,700 more jobs as it struggles to recover, its new chief executive said on Wednesday, warning that Switzerland`s largest bank faces an uncertain future.
Chief Executive Oswald Gruebel, the veteran former Credit Suisse boss who has been pulled out of retirement to get UBS back into shape, said the bank will post a first-quarter loss of nearly 2 billion Swiss francs (USD 1.74 billion), mainly due to writedowns and outflows at its prized wealth management unit.
UBS shares were indicated down 2 percent.
He was due to tell the bank`s annual general meeting that he aimed to cut staff to 67,500 in 2010 from 76,200 at the end of March in a bid to save up to 4 billion francs.
"Unfortunately I am not able -- as yet -- to offer you any good news. Instead I am forced to present you with another round of unsatisfactory performance figures and to announce further drastic measures," Gruebel said in the text of his speech.
"Our outlook remains cautious and we face many uncertainties. We have to prepare ourselves for this even though we are entitled to be very optimistic about the longer-term prospects for our bank."
Traders welcomed the job cuts but said the loss was bigger than expected.
"The result is a huge disappointment. After the unexpectedly good figures from Goldman Sachs and Wells Fargo and optimistic comments from Deutsche Bank about the first months, we were expecting at least a flat result from UBS," one said.
The financial crisis has already forced the bank to announce about USD 50 billion of writedowns and 11,000 job cuts since mid-2007 and its shares have lost nearly three- quarters of their value in the last twelve months as it struggles to recover.
About 2,500 jobs would be axed at the bank`s home Swiss division, which employed above 26,000 people at the end of 2008. Gruebel gave no details about headcount reductions in other regions.
NEW LOSS
UBS posted in 2008 a 20.9 billion franc full-year loss, the biggest ever for a Swiss company.
The first-quarter loss follows about 3.9 billion francs of losses on illiquid assets and 23 billion francs of outflows at the bank`s wealth management and Swiss bank division, Gruebel also said.
UBS has been the target of a US tax fraud investigation alleging it had helped rich US clients to hide untaxed money in secret Swiss accounts and Gruebel said the outflows accelerated after the bank agreed in February to pay a USD 780 million fine.
But the onshore wealth management business in America performed well, with net new money amounting to 16 billion francs in the first quarter.
Gruebel said investment banking, which is to blame for most of the bank`s losses so far, would continue to be a necessary business for UBS but said he was carrying out a review of all business areas to decide which to exit.
He said the investment bank would build on its strong positions in equities, foreign exchange, corporate finance and M&A, but would exit other areas and geographies.
The CEO also said UBS would make big cuts in marketing, sponsorship and external consultants and support and would also make significant savings by cancelling certain employee benefits, mostly at the management level.
The icon of Swiss banking, came on the verge of collapse in the autumn and was forced to go to the Swiss state in October for help.
Berne gave it a cash injection of 6 billion Swiss francs (USD 5.21 billion) and the Swiss National Bank agreed to absorb into a special fund some of UBS` toxic assets now amounting to USD 40 billion.
Bureau Report
