Switzerland’s biggest bank, UBS announced Wednesday that it would look to cut costs by shedding 8,700 jobs by 2010. The statement came as the bank announced the loss of 2 billion Swiss Francs ($1.75) in the first quarter of 2009.
The reduction in its workforce amounts to around 11% with 18,000 laid off. The main areas of job cuts will be in Switzerland and the United States.
The Swiss banking giant has suffered heavily from previous “wild excesses” according to Oswald Gruebel, the CEO which was hired to clean up the mess.
“Major job cuts are unfortunately unavoidable,” he said, indicating that UBS would cut its global workforce to about 67,500 in 2010. The cuts will come in Switzerland but also in the City of London, which has already shed tens of thousands of jobs since the economic crisis began unfolding.
UBS said it is conducting a review to exit “high-risk and unpromising” businesses. The bank said it will maintain operations in international wealth management and Swiss banking, alongside asset management and investment banking. The statement raises concern over the future of the tradving arm of UBS, which will probably be amputated in an attempt to get back to the roots.
UBS has already lost billions of dollars over the past two years and receiveed a bailout from the Swiss government, said it “estimates that it will report a loss attributable to shareholders of almost 2 billion francs in first quarter 2009.”
It said the shortfall is due mostly to losses of about 3.9 billion francs on previously disclosed bad investments, credit loss expenses and adjustment in values of toxic assets.
The bank is also still in talks with US authorities over tax isssues. In February, UBS ceeded to US pressure and agreed to pay $780 million to the US government to settle against allegations that it defrauded US tax authorities.
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