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Thu, Apr 16, 2009 - Page 10 News List

UBS expects loss of SF2 billion

HURTING Clients have continued to withdraw money from the bank in the wake of a decision to cooperate more closely with foreign authorities over tax evasion

AP , ZURICH, SWITZERLAND

The New York office of UBS AG is pictured on Feb. 19. UBS plans to cut 8,700 jobs to cut costs.

PHOTO: AFP

UBS AG, Switzerland’s largest bank, said yesterday it expects a first-quarter loss of nearly 2 billion Swiss francs (US$1.75 billion) and will cut 8,700 jobs worldwide by the end of next year.

It also said clients have continued to withdraw their money from the bank in the wake of its decision to cooperate more closely with foreign authorities over tax evasion.

The firm, which has been hard-hit by subprime-related losses, said it would “adapt its size to the changed market conditions and lower levels of business.”

“UBS is planning cost savings by the end of 2010 of approximately 3.5 to 4 billion francs compared to 2008 levels,” the bank said in releasing details on its situation in advance of the annual shareholders meeting.

In prepared remarks for the meeting, new CEO Oswald Gruebel said the bank knows where it has to set to work.

“It will be a long road back to success without any quick fixes,” Gruebel said. “Rather, we will move forward step by step in a rigorous and disciplined manner.”

The bank, which already has suffered billions of dollars of losses over the past two years and received 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 SF3.9 billion on previously disclosed bad investments, credit loss expenses and adjustment in values of toxic assets.

UBS said its wealth management and Swiss bank division recorded an outflow of net new money totaling SF23 billion. That occurred mainly after the announcement of a settlement with US authorities over their investigation into UBS’ alleged assistance to wealthy Americans seeking to avoid paying US taxes.

At the same time, it said its wealth management Americas unit recorded net new money of around SF16 billion.

The bank said it still expects to have a tier 1 capital ration of about 10 percent at the end of the first quarter.

The bank said the job cuts would be unavoidable because it needs to have cost savings in all areas.

“UBS expects to reduce the number of its employees to about 67,500 in 2010,” a statement said. “At the end of March 2009 UBS employed 76,200 people in over 50 countries.”

The bank said it would continue to reduce risks and was conducting a review to decide which high-risk and unpromising businesses it would exit.

Full first-quarter results and other details about the banks plans will be released on May 5, it said.

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