UBS losses trigger jobs cull

UBS confirmed investors' worst fears yesterday as it unveiled an estimated loss of almost SFr2bn ($1.75bn) for the first quarter and a cull of more than 11 per cent of its workforce.

The figures, which were worse than market expectations, punctured growing optimism about a recovery in global banking stocks after this week's better than forecast results from Goldman Sachs, and reminded investors of the considerable risks still confronting big banks in the credit crisis.

The results were delivered by the bank's new chief executive, Oswald Grübel, the veteran Credit Suisse boss who emerged from retirement to run UBS just seven weeks ago.

UBS said it expected to lose about SFr3.9bn through writedowns on remaining illiquid positions and credit losses. The figure took its total writedowns to more than $50bn since the start of the credit crisis and included a final SFr300m valuation adjustment on the SFr39bn package of toxic assets transferred last year to the Swiss National Bank.

The expected loss would result in a 1 percentage point reduction in the bank's Tier 1 capital ratio from the 11 per cent reported at the end of December.

The group signalled further big job cuts to adjust to reduced business, with 8,700 jobs to go by 2010. That would lower the total workforce to 67,500 – down almost 16,000 from the early 2008 peak of more than 83,000. Mr Grübel said the layoffs and other savings would lower costs by SFr3.5-4bn by the end of next year, compared with 2008.

He gave no details of which jobs would go, but warned not even the core Swiss market would be spared. Although previous cuts had been focused on investment bankers in New York and London, about 2,500 jobs losses were expected in Switzerland this time.

He reaffirmed the company's commitment to its three core businesses of private banking, investment banking and asset management, but clearly stressed the first of the three. “We see no reason to question the fundamental attractiveness of our integrated business model,” he said.