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Bank suffers in tax evasionprobe fallout
By Ernst Abegg |
April 16, 2009, Thursday
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Print Edition
Print Edition
SWITZERLAND'S largest bank, UBS AG, said yesterday it expects a first-quarter loss of nearly 2 billion Swiss francs (US$1.75 billion) and said it would be cutting 8,700 jobs worldwide by the end of next year.
It said clients had 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 company, which has been hard-hit by subprime-related losses, said it will "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 advance of the annual shareholders meeting.
New Chief Executive Oswald Gruebel said: "It will be a long road back to success without any quick fixes. Rather, we will move forward step by step in a rigorous and disciplined manner."
The bank, which 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 was due mostly to losses of about 3.9 billion francs on bad investments, credit loss expenses and adjustment in values of toxic assets.
The company's share price plunged as much as 8.7 percent in early trading in Zurich, before recovering somewhat to fall 0.8 percent to 13.16 francs.
UBS said its wealth management and Swiss bank division recorded an outflow of net new money totaling 23 billion francs.
That occurred mainly after the announcement of a settlement with United States authorities over their investigation into UBS's alleged assistance to wealthy Americans seeking to avoid tax.
At the same time it said its wealth management Americas unit recorded net new money of around 16 billion francs.
The bank said job cuts would be unavoidable.
"UBS expects to reduce the number of its employees to about 67,500 in 2010," it said.
"At the end of March 2009 UBS employed 76,200 people in over 50 countries."
UBS has provided US investigators the details of up to 300 wealthy Americans suspected of tax fraud, but has refused to identify about 50,000 more US account holders.
It said clients had 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 company, which has been hard-hit by subprime-related losses, said it will "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 advance of the annual shareholders meeting.
New Chief Executive Oswald Gruebel said: "It will be a long road back to success without any quick fixes. Rather, we will move forward step by step in a rigorous and disciplined manner."
The bank, which 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 was due mostly to losses of about 3.9 billion francs on bad investments, credit loss expenses and adjustment in values of toxic assets.
The company's share price plunged as much as 8.7 percent in early trading in Zurich, before recovering somewhat to fall 0.8 percent to 13.16 francs.
UBS said its wealth management and Swiss bank division recorded an outflow of net new money totaling 23 billion francs.
That occurred mainly after the announcement of a settlement with United States authorities over their investigation into UBS's alleged assistance to wealthy Americans seeking to avoid tax.
At the same time it said its wealth management Americas unit recorded net new money of around 16 billion francs.
The bank said job cuts would be unavoidable.
"UBS expects to reduce the number of its employees to about 67,500 in 2010," it said.
"At the end of March 2009 UBS employed 76,200 people in over 50 countries."
UBS has provided US investigators the details of up to 300 wealthy Americans suspected of tax fraud, but has refused to identify about 50,000 more US account holders.
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