Rich clients deserting wealth management businesses

“UBS cuts 5,500 jobs after £5.5bn quarterly loss”

UBS cut 5,500 jobs and sold $15 billion (£7.6 billion) worth of damaged assets yesterday, shares in Switzerland’s biggest bank fell by more than 4 per cent amid fears that restructuring would wreak further havoc

The bank added to investors’ woes by revealing that rich clients were deserting its wealth management business and business banking clients in its home market had pulled almost SwFr2 billion (£960 million) from their accounts in the first quarter

Job cuts include 2,600 staff from UBS’s investment bank, which ran up most of the group’s $37.4 billion in credit crunch writedowns. Fewer than 900 jobs are expected to be lost from the investment bank in London, where UBS employs about 9,000 people. Marcel Rohner, the chief executive indicated that the worst of the staff cull was over.

UBS said that it had agreed to sell a $15 billion book of sub-prime mortgages to BlackRock, the asset management group. The mortgages had already slumped in value from $22 billion, the bank said.

Source: Times Online

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UBS revamp after sub-prime losses

“Swiss Investment Bank UBS plans to shrink its investment banking business ...”

"I know that 2007 was a year that challenged and tested us all individually and collectively," UBS CEO Mr Rohner said.After huge losses caused by exposure to problems in the US sub-prime housing market. UBS makes further job cuts and scale back on its more-risky strategies, Marcel Rohner outlined in today's internal memo.
UBS has written off about $14bn (£7.1bn) in debts linked to sub-prime loans and has warned of further losses. The dramatic plans to streamline operations at UBS centre on the division responsible for its distressed mortgage-backed investments.

These holdings will be gradually wound up, as the no longer attractive sector they invested in has suffered badly.

Staffing levels in the division will significantly reduce, and the amount of capital the bank commits to that area of business will also shrink by two-thirds.

In an internal memo, seen by the BBC, Mr Rohner also said he wanted UBS to focus on its clients rather than on using the bank's capital to boost its profits.

Bond and currency trading business will also be restructured to cut costs and transfer capital to more profitable areas.

Tough times

The changes come as UBS struggles to better position itself after becoming one of the worst victims of the global credit squeeze.

Last July the firm layed off 1,500 jobs, sacked its chief exec Peter Wuffli and replaced him with his deputy Marcel Rohner. Like many of its troubled peers, UBS has turned to wealthy state-backed funds in the Middle and Far East for financial support.

Singapore's investment arm has bought shares in the bank for almost $10bn, while an unnamed Middle Eastern investor, thought to be the Oman government, has also taken a stake.

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