UBS to ditch fixed-income business, cut 10,000 jobs
Source: Agencies |
October 31, 2012, Wednesday
|
Print Edition
Print Edition
UBS yesterday unveiled plans to wind down its fixed-income business and fire 10,000 bankers, as it adapts to tougher capital rules that make it more difficult for investment banks to turn a profit since the financial crisis.
Zurich-based UBS will focus on its private bank and a smaller investment bank, ditching much of the trading business that ran up US$50 billion in losses in the financial crisis, as well as a US$2.3 billion hit from trader Kweku Adoboli last year, now on trial on charges of fraud and false accounting.
Chief Executive Sergio Ermotti, a former Merrill Lynch and UniCredit banker who took over after the Adoboli affair last year, is leading the three-year overhaul, which is aimed at saving 3.4 billion Swiss francs (US$3.6 billion), on top of existing spending cuts of 2 billion francs.
Former investment bank co-head Carsten Kengeter will lead the isolation and winding down of its fixed-income activities that are no longer profitable as a result of tougher capital rules on riskier business introduced after the crisis.
The remaining investment bank - equities, foreign exchange trading, corporate advice, and precious metals trading - will be run by Andrea Orcel, a recent Ermotti hire from Bank of America who had co-ran the unit with Kengeter until yesterday.
"This decision has been hard but it is necessary to create a UBS that is fit for the future," Ermotti said. "The business model we are creating will be unique in the banking industry."
Financial crisis
The measures translate to a 15 percent staff cut, taking UBS's overall staff to 54,000, from 63,745 now, already down from a 2007 peak of 83,500 as banks have shed tens of thousands of jobs globally since the financial crisis of 2008.
Of the job cuts, 2,000 will be front-office investment banking staff, the revenue generators. About 2,500 positions will go in Switzerland, slightly more than that in the United States, and the rest in Britain, Ermotti said.
A smaller investment bank will leave UBS focused on its private bank, which looks after the affairs of the wealthy. With 1.6 trillion francs in assets, it is the second-largest operation of its kind in the world after Bank of America.
UBS, which took a government bailout in 2008 after more than US$50 billion in mortgage losses, is effectively admitting that an attempt to crack the fixed-income big league has failed.
Deutsche Bank said yesterday it hopes to benefit from the UBS cuts as its investment bank delivered record third-quarter sales and trading revenue.
Zurich-based UBS will focus on its private bank and a smaller investment bank, ditching much of the trading business that ran up US$50 billion in losses in the financial crisis, as well as a US$2.3 billion hit from trader Kweku Adoboli last year, now on trial on charges of fraud and false accounting.
Chief Executive Sergio Ermotti, a former Merrill Lynch and UniCredit banker who took over after the Adoboli affair last year, is leading the three-year overhaul, which is aimed at saving 3.4 billion Swiss francs (US$3.6 billion), on top of existing spending cuts of 2 billion francs.
Former investment bank co-head Carsten Kengeter will lead the isolation and winding down of its fixed-income activities that are no longer profitable as a result of tougher capital rules on riskier business introduced after the crisis.
The remaining investment bank - equities, foreign exchange trading, corporate advice, and precious metals trading - will be run by Andrea Orcel, a recent Ermotti hire from Bank of America who had co-ran the unit with Kengeter until yesterday.
"This decision has been hard but it is necessary to create a UBS that is fit for the future," Ermotti said. "The business model we are creating will be unique in the banking industry."
Financial crisis
The measures translate to a 15 percent staff cut, taking UBS's overall staff to 54,000, from 63,745 now, already down from a 2007 peak of 83,500 as banks have shed tens of thousands of jobs globally since the financial crisis of 2008.
Of the job cuts, 2,000 will be front-office investment banking staff, the revenue generators. About 2,500 positions will go in Switzerland, slightly more than that in the United States, and the rest in Britain, Ermotti said.
A smaller investment bank will leave UBS focused on its private bank, which looks after the affairs of the wealthy. With 1.6 trillion francs in assets, it is the second-largest operation of its kind in the world after Bank of America.
UBS, which took a government bailout in 2008 after more than US$50 billion in mortgage losses, is effectively admitting that an attempt to crack the fixed-income big league has failed.
Deutsche Bank said yesterday it hopes to benefit from the UBS cuts as its investment bank delivered record third-quarter sales and trading revenue.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
