UBS AG, the European bank with the biggest losses from the credit crisis, plans to eliminate about 1,900 jobs in its investment banking, equities, and fixed income units, two people with knowledge of the matter said.
The bank may announce the plans at tomorrow's shareholder meeting, according to the people, who declined to be identified because they weren't authorised to discuss the cuts, which would amount to about 10 percent of the total investment banking staff. Support staff jobs will also go, the people added. Rohini Pragasam, a UBS spokeswoman in New York, declined to comment.
UBS, Switzerland's biggest bank, is scaling back its investment banking unit, which it plans to separate from wealth and asset management after mounting writedowns prompted rich clients to withdraw funds for the first time in almost eight years. The cuts add to the 7,000 already announced by Zurich- based UBS, and would bring to more than 131,700 the total number of jobs eliminated at banks worldwide since July 2007.
“It is unquestionably the worst hiring climate I've seen in 30 years in the City for the European markets,” said Shaun Springer, chief executive officer of Napier Scott Executive Search Ltd. in London.
UBS rose 4 per cent to 19.19 Swiss francs at 10:35 a.m. in Zurich trading. The bank has dropped 58 per cent so far this year, paring its market value to about 56 billion francs ($50 billion).
Dresdner Note: UBS has taken writedowns and credit losses of $44.2 billion since the credit crisis began last year, more than any other European bank.
The bank may post a quarterly profit in November after gains from credit spreads and the sale of a fund manager stake, Dresdner Kleinwort analysts said today. UBS may report a profit of 755 million francs for the three months through September and a writedown of 3.3 billion francs for the period, according to analyst Stefan-Michael Stalmann, who has a “hold” rating on the stock.
“We believe UBS has returned to profitability for the first time since” the second quarter of 2007, Stalmann wrote today in a note to investors. “The large positive contribution from gains on own liabilities and the outflows of client money across the board would make this a low quality set of results.”
Chief Executive Officer Marcel Rohner and Chairman Peter Kurer, trying to stem client redemptions and record share price declines, will brief shareholders tomorrow on efforts to scale back the investment bank and overhaul the board. UBS is scheduled to report detailed third-quarter earnings November 4.
Lehman Brothers: Lehman Brothers Holdings Inc, the securities firm that filed for bankruptcy two weeks ago, yesterday eliminated 750 jobs in its European fixed income and personal investment management units after talks to find a buyer failed. Nomura Holdings Inc., Japan's biggest securities firm, agreed to buy Lehman's European investment banking and equities units in Europe along with its Asian-Pacific unit. London-based Barclays Plc purchased Lehman's US investment banking unit for $250 million.
European governments have come to the rescue of five banks this week as the worst financial crisis since the Great Depression spreads beyond the US.
Belgium, the Netherlands and Luxembourg agreed to inject 11.2 billion euros ($15.8 billion) into Fortis for minority stakes, while Belgium and France led a ¤6.4 billion bailout of Dexia SA. Bradford & Bingley Plc was seized by the UK government, Iceland's Glitnir Bank hf was bailed out by the country's Financial Supervisory Authority and Germany's Hypo Real Estate Holding AG received a government loan guarantee.
In the US, Congress plans to vote again this week on a $700 billion financial-rescue package that would enable the Treasury secretary to buy assets from banks after government efforts to prop up companies including American International Group Inc and Fannie Mae and Freddie Mac failed to restore market confidence. The US House of Representatives voted against the plan September 29.
UBS's investment bank, which comprises fixed income, equities and investment banking, employed 19,475 people at the end of June, a 12 percent decline from 22,137 a year earlier.
