Swiss banking major UBS on Wednesday said it will slash its headcount by 8,700 employees globally and expects losses to the tune of two billion Swiss francs (about $1.75 billion) in the first quarter this year.
In a preliminary announcement of key elements of its first-quarter results, UBS stated that it estimates to make a net loss of about 2 billion Swiss francs in the first quarter of this year due to losses on illiquid risk positions and credit loss expenses.
Further, the bank said it was seeking to realise substantial cost savings in all areas, for which job cuts would be unavoidable.
"UBS expects to reduce the number of its employees to about 67,500 in 2010," the company said adding that at the end of March 2009 it had 76,200 employees in over 50 countries.
Further, UBS statement, highlighting the key points included in the speech of Group CEO Oswald J Grubel at its annual general meeting, today stated that in order to adapt its size to the changed market conditions and lower levels of business, it is planning cost savings by the end of 2010 of about 3.5 to 4 billion Swiss francs compared to 2008 levels.
Giving reasons for the estimated loss for the first quarter, UBS stated that, "the loss stems from a negative contribution totalling roughly 3.9 billion Swiss francs due to losses on previously disclosed illiquid risk positions, credit loss expenses and valuation adjustments on the last positions transferred to a fund controlled by the Swiss National Bank."
However, despite some positive signal, the UBS would close the first quarter with an overall outflow of net new money. The business division Wealth Management & Swiss Bank has recorded a net outflow of about 23 billion Swiss francs.
"This outflow was mainly recorded after the announcement of the settlements with the US authorities in connection with their investigations into our cross-border services for US private clients," the statement added.
On the other hand, Wealth Management Americas recorded a positive result, with net new money of around 16 billion Swiss francs.
"We know where we have to set to work. 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," Grubel noted in his speech.
In future, the UBS would maintain its core business --international wealth management and the Swiss banking business -- alongside its global expertise in investment banking and asset management.