Arab Today, arab today ubs shares soar on plan to cut 10000 jobs
Last Updated : GMT 11:49:44
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UBS shares soar on plan to cut 10,000 jobs

Arab Today, arab today

Arab Today, arab today UBS shares soar on plan to cut 10,000 jobs

Zurich - AFP

Swiss banking giant UBS on Tuesday announced nearly 10,000 job cuts and a third quarter bathed in red due to a massive restructuring of its ailing investment bank, in the latest blow to a Swiss banking sector under fire. The Zurich-based bank confirmed rife speculation in recent weeks that large-scale lay-offs were in store, saying it would trim its overall staff numbers to about 54,000 by 2015 from the 63,745 it counted at the end of September as part of a large-scale overhaul of its investment bank. That restructuring also carried a steep price tag, the bank said, as it blamed charges generated by the operation for a 2.2-billion Swiss franc (1.8-billion euro, $2.3-billion) net loss in the third quarter. UBS had posted a 1.0-billion franc profit in the same period a year earlier. Analysts polled by financial agency AWP had expected the bank to pull in a net profit of 430 million francs this time around. The worse-than-expected result did not dampen traders\'s response to news of the restructuring, however and UBS\' share price gained 5.11 percent in afternoon trades, while the Swiss stock market was up by 0.58 percent overall. UBS chief executive Sergio Ermotti said the call to let so many bank employees go had been tough. \"This decision has been a difficult one, particularly in a business such as ours that is all about its people,\" he said in a statement. UBS, which had already announced 5,500 job cuts last year, would focus the latest round on London and New York, Ermotti told reporters, adding that 2,500 jobs would also be shed in Switzerland. The bank insisted the cuts were a necessary part of an ongoing restructuring of its investment bank, including shedding some high-risk activities and basically withdrawing from the fixed income business which had burdened it with catastrophic losses during the 2008 \"subprime\" crisis. UBS\'s investment bank has been struggling to get back on its feet ever since, but has run into a number of stumbling blocks along the way. Last year, it emerged that one of its traders in London, Kweku Adoboli, had lost $2.3 billion (1.78 billion euros) of the bank\'s money. UBS, like other Swiss banks, has also faced rising pressure over the country\'s cherished bank secrecy laws amid a tightening of international banking regulations, and Ermotti said Tuesday there was no sign of relief on the horizon. \"The trend toward increased regulation for banks is not going away,\" he said, before predicting that the resulting \"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\" if they do not change their structures. UBS, which says that the restructuring and severing of its fixed income unit will save 5.4 billion francs over the next three years, added that its investment bank would now focus financial advice, analysis, and trading in stock and precious metals. The Helvea financial research company said Tuesday that the announced changes were a \"long overdue move that will be heartily welcomed by all but the 10,000 or so that will see their jobs disappear.\" The Swiss banking union however called on UBS to retrain the affected employees so they could be moved to other units instead of laid off, while the head of the Swiss Socialist Party, Christian Levrat, decried the bank\'s \"flagrant cynicism\" and lamented that its \"personnel is paying the price\" for its mistakes. The bank said in an earnings statement that it had taken a one-time charge of 3.1 billion Swiss francs linked to goodwill impairments and a charge of 863 million related to a significant tightening of the bank\'s credit spreads over the quarter. Ermotti hailed the results, stressing that all the bank\'s activities had \"delivered improved profitability in the third quarter,\" and that it was rolling out its strategy \"well ahead of schedule.\" UBS finance chief Tom Naratil told a conference call that the bank had \"delivered a solid performance despite a challenging environment.\" The bank nonetheless expected to pay a further 500 million francs in restructuring charges in the fourth quarter, which would likely keep its net result in the red. But Naratil stressed that despite the difficult economic environment, the bank had managed to raise a \"record\" amount of fresh capital, including 7.7 billion francs from the Asia Pacific region, emerging markets and wealthy clients. The bank said it expected to pull in more fresh capital in the current quarter despite a persistently difficult business climate.

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