UBS announced on Tuesday that it was to cut 3,500 jobs, or more than 5 per cent of its workforce, in the latest move by the international bank to reduce costs amid tough trading conditions.
The reductions, which had been signalled last month, were less than the 5,000 initially feared and will fall, as expected, predominantly on the group's investment bank.
Similar to its counterparts, UBS's revenues have fallen and profits squeezed amid lower trading volumes, increasingly stringent regulatory requirements and consistently high costs. In recent weeks, HSBC, Barclays, Goldman Sachs and Credit Suisse have slashed thousands of jobs
UBS, together with its arch rival Credit Suisse, have been further burdened by the strength of the Swiss franc. This has depressed the value of income streams from other countries and reduced fees from clients' portfolios at its powerhouse private bank, while the bulk of costs have remained in Switzerland.
UBS hinted further cuts could still come. "The measures announced today are designed to improve operating efficiency. UBS will continue to be vigilant in managing its cost base while remaining committed to investing in growth areas", it said.
The group, which soon after the financial crisis embarked on a costly drive to rebuild its deeply scarred trading operations, said the latest measures were designed to reduce costs by SFr2-billion ($2.5-billion U.S.) a year by the end of 2013.
Almost half the staff cuts will be in the investment bank, while just over a third will come in private banking, which is emerging increasingly as the true core business for both UBS and Credit Suisse. A further 350 jobs each will be cut in asset management and the group's independently run US wealth management business.
UBS said the cuts would trigger a SFr550-million restructuring charge. Some SFr450-million of that will be booked between now and the end of December, with "the substantial majority" of the total falling in the third quarter.
About SFr400-million of the restructuring charges will relate to the redundancies, with a further SFr150-million reflecting charges on property.