Parting company with some banking leaders who intimated lately the worst is over for their institutions, UBS's new chief executive unveiled plans to cut worldwide headcount by 10 percent, or 7,500 jobs, by the end of next year.
"We want to focus our trading activities on client business," Oswald Grubel said Wednesday at the bank's annual general meeting in Switzerland. "Across all parts of the Investment Bank we will be exiting certain areas of activity completely and reducing risks. We will concentrate on the most important capital markets, and withdraw from certain locations."
eFinancialCareers-UK Editor Sarah Butcher relays analyst Peter Thorne's view that anything not client facing or low risk in the investment bank will be up for removal. Headcount within the long-troubled investment banking division could shrink from 17,000 at present to the 10,000 - 12,000 range, says Thorne, who follows UBS for Helvea, an independent brokerage.
Grubel also plans to slash spending on marketing, sponsorship and external consultants, the New York Times reports.
Chairman Calls UBS Situation 'Precarious'
Thus far, UBS has lagged behind rivals in cutting banking staff. The Times says that since the financial crisis began almost two years ago, the Swiss banking giant had announced more than 11,000 job cuts worldwide, including 2,000 in investment banking. It currently employs about 76,200 people in over 50 countries. On Tuesday UBS said it's eliminating about 240 wealth management jobs in Asia.
While top executives at Goldman Sachs, Credit Suisse and Deutsche Bank have sounded hopeful notes in recent weeks, Grubel and departing UBS Chairman Peter Kurer were more gloomy. Grubel said the outlook remains "cautious" and uncertain. Kurer called UBS's situation "precarious."
The crisis is hitting UBS especially hard because its previous management expanded into riskier businesses at the peak of the market, the Times observes. Meanwhile, its private wealth management division - a low-risk operation that leads the world in assets under management - has been tarnished by formal charges it knowingly helped thousands of wealthy customers illegally evade taxes in the U.S. and other countries.