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UBS to slash 10,000 jobs in cost cut

Tuesday, October 30 11:38:25

UBS unveiled plans today 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 $50 billion in losses in the financial crisis, as well as a $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 ($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 Tuesday.

"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." (C ) Reuters