Swiss banking giant UBS today announced plans to cut 8,700 jobs as it braced investors for first-quarter losses of almost two billion Swiss francs (£1.18bn).
The bank, which agreed a Swiss government bail-out last October, will cut staff levels from the current 76,200 in 50 countries to 67,500 in 2010.
UBS was heavily exposed to the complex mortgage-backed investments hit by the credit crunch and the latest losses reflect a further SwF3.9bn (£2.3bn) write-down on its toxic assets.
The new cull comes just two months after UBS said it was cutting at least 2,000 more jobs, mostly from its troubled investment banking division.
Chief executive Oswald Grubel said: “We know where we have to set to work. It will be a long road back to success without any quick fixes.”
The news is a setback for the sector after better than expected results from US banks Goldman Sachs and Wells Fargo in recent days.
UBS is planning to make savings of up to SwF4bn (£2.36bn) to cope with the tough market conditions and lower levels of business. The bank said the job cuts were “unfortunately unavoidable”. It will cut 2,500 jobs in Switzerland, and thousands more in the US. UBS currently employs 7,000 people in the UK — mostly in London — but refused to say how many jobs were at risk in the UK.
Despite the latest losses UBS said it had a tier 1 capital ratio — a key measure of balance sheet strength — of around 10% at the end of March.
But UBS also said it saw a net SwF7bn (£4.1bn) flow out of the bank during the first three months of 2009 from business customers.
This was seen mainly after it paid a fine of $780m (£525m) to US authorities in February to settle charges of assisting alleged tax fraud by some of its US clients.
UBS is also carrying out a review of the bank to reduce risk and exit “high risk and unpromising businesses”.
At the height of the financial crisis last autumn, it transferred billions in toxic debts to a fund owned by the Swiss National Bank (SNB) in an attempt to take the risk off its balance sheet.