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Wed, Feb 11, 2009 - Page 10 News List

UBS reports 2008 loss of US$16.8bn, cuts jobs

TARGETS After suffering severe losses, the bank said it would refocus on its core activity in Switzerland, as well as global wealth management and onshore business

AGENCIES , ZURICH

Swiss bank UBS AG said yesterday it lost 8.1 billion Swiss francs (US$7.57 billion) in the fourth quarter and announced it would cut a further 2,000 jobs as it refocuses on its home market after a troubled year abroad.

The results exceeded the fears of analysts, who on average had predicted net losses of SF6.2 billion (US$5.79 billion).

A year earlier Switzerland’s biggest bank had reported a net profit of SF1.33 billion. The latest results bring its full-year loss to SF19.7 billion. UBS said it planned to refocus on its core activity in Switzerland, its international wealth management franchise and its global onshore business. To this end it will create two new business units.

Wealth management and Swiss bank will be led by Franco Morra and Juerg Zeltner, while wealth management Americas will be led by Marten Hoekstra.

UBS is also shedding 2,000 jobs at its loss-making investment banking unit, which has been blamed for many of the bad investment choices that have seen the bank write down tens of billions of dollars since mid-2007.

The Zurich-based bank said net new money outflows from its wealth and asset management businesses reached SF85.8 billion during the fourth quarter .

UBS also revealed it will pay staff bonuses of SF2.2 billion for the year. Further payments of SF1.6 billion will be delayed until next year. The bank has been embroiled in a fierce public debate over bonus payments since taking up a US$60 billion bailout offer from the Swiss government last year.

UBS announced in November that its chief executive, chairman and the executive board would receive no bonus payments for last year. Since then several former top officials also have declined or handed back million-dollar payments.

UBS expressed cautious optimism for the coming year, saying that while market conditions remained fragile it had seen positive net new money inflows last month. Net new money is an important indicator of future business in the banking sector.

The bank said it remained the subject of several investigations, including a tax evasion probe in the US. The Internal Revenue Service has requested that UBS hand over details on US clients suspected of having avoided paying taxes by hiding money in offshore accounts with the bank’s knowledge.

“UBS has been working to respond in an appropriate and responsible manner to all of these investigations in an effort to achieve a satisfactory resolution of these matters,” UBS said in a statement.

The bank warned investors that other countries might follow the lead of US authorities and investigate its cross-border wealth management business.

“It is premature to speculate as to the scope or effect of any such reviews,” UBS said.

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