UBS reports net loss of $1.75 bln, to cut 7,500 jobs

Bloomberg

The bank will reduce the number of employees to 67,500 in 2010, compared with a previous target of 75,000, Zurich-based UBS said yesterday. It reported a net loss of "almost" 2 billion Swiss francs ($1.75 billion) for the first quarter.

Chief Executive Officer Oswald Gruebel, who was called out of retirement in February, said there are no "quick fixes" to restore profit after the biggest credit-related writedowns of any European bank. Job cuts, along with reductions in marketing, sponsorships and consulting costs, will help save as much as 4 billion francs by the end of 2010, UBS said.

"It’s back to basics," said Andy Lynch, who helps manage about $5 billion at Schroder Investment Management in London. "UBS, in common with every other financial institution, is looking to cut costs" and will probably cut back in trading while focusing on its "private banking heritage."

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.

"It will be a long road back to success," Gruebel said in a speech prepared for delivery at the bank’s annual shareholders’ meeting in Zurich. "Markets remain extremely unstable. That’s why we are acting by rigorously adjusting the size of our bank and cutting costs significantly once again."

UBS has fallen 11 percent this year in Swiss trading, cutting its market value to 38.9 billion Swiss francs. That compares with a 2.1 percent gain in the 65-member Bloomberg Europe Banks and Financial Services Index.

Financial institutions worldwide announced almost 300,000 job cuts since the beginning of the credit crisis as writedowns and losses swelled to $1.3 trillion. Goldman Sachs Group Chief Financial Officer David Viniar said Tuesday the U.S. bank remains "cautious about the near-term outlook" after reporting a first-quarter profit that exceeded the most optimistic Wall Street estimates, helped by trading in fixed-income, currencies and commodities.

UBS last month posted a 20.9 billion-Swiss-franc loss for 2008, the biggest-ever by a Swiss company. The bank amassed more than $50 billion in writedowns and losses since the beginning of the global financial crisis.