Swiss bank UBS AG said it would cut 5,500 jobs or almost 7 per cent of its workforce through layoffs and attrition in the wake of the subprime credit crisis as it reverses a rapid expansion into investment banking.
UBS said conditions in the financial markets and the global economy remained difficult and reported a first-quarter loss of 11.54 billion Swiss francs (€7.05 billion), slightly better than what it had already announced in April.
The bank recorded net inflows in its two wealth management businesses of 5.6 billion francs, according to a statement today. Analysts polled by Reuters on average had expected inflows of 9 billion and a net loss of 11.9 billion.
UBS is Europe's biggest banking sector casualty of the subprime crisis after posting over $37 billion (€24 billion) in writedowns. The crisis ripped a hole in UBS's balance sheet and exposed widespread weaknesses in strategy, risk control and management culture.
UBS has since pared its ambitions, swept out senior management and raised around 39 billion francs in new capital.
Today's announcements mark the largest effort made to date by the bank to reshape itself and face a downturn in the investment banking sector.
UBS was expected by analysts to slash around 10 per cent of its investment banking workforce of 22,000.
Pressure remains on UBS to do more, with activist investor group Olivant criticising UBS's choice of lawyer Peter Kurer as its new chairman and calling on the bank to consider selling off its investment bank.
UBS shares have risen around 15 percent in the past month, compared with a rise of roughly 3 per cent in the DJ Stoxx European banking sector index, making it the biggest heavyweight gainer as confidence returns to the financial markets.
Prior to the recent rally, UBS was the biggest share price loser among heavyweight blue chips.