Swiss financial giant UBS says it plans to cut 5,500 jobs, or roughly 7% of its workforce, after it reported a record $10.9 billion loss in Q1, which was in-line with estimates. UBS will shed 2,600 from its securities division and sell $15 billion in distressed assets to a fund managed by Blackrock. Bloomberg:
UBS fell as much as 5.6 per cent in Swiss trading, the most in seven weeks, after clients withdrew more assets than they added for the first time in almost eight years. Chief Executive Officer Marcel Rohner told analysts he expects “tough business conditions,” which already caused $38 billion of markdowns at the company, to continue.
If the damage from investment-banking losses to the UBS brand name is high, it’s very likely that there will be cost measures also at the private bank,” said Paul Vrouwes, a fund manager at ING Investment Management who helps oversee about $23 billion, including UBS shares. “In the coming quarters and potentially even years, the securities industry will have to live with lower transactions and lower commissions.”
The UBS cuts come on top of more than 48,000 reductions so far in the finance and banking industry in a crisis that has claimed at least $319 billion in writedowns.