UBS sees $1.75B Q1 loss, to cut 8,700 jobs
15 Apr 2009 | 04:36 AM ET By: The Associated Press ZURICH - UBS AG, Switzerland's largest bank, said Wednesday it expects a first quarter loss of nearly 2 billion Swiss francs ($1.75 billion) and that it will cut 8,700 jobs worldwide by the end of next year. It also said clients have continued to withdraw their money from the bank in the wake of its decision to cooperate more closely with foreign authorities over tax evasion. The company, which has been hard-hit by subprime-related losses, said it will "adapt its size to the changed market conditions and lower levels of business." "UBS is planning cost savings by the end of 2010 of approximately 3.5 to 4 billion francs compared to 2008 levels," the bank said in releasing details on its situation in advance of the annual shareholders meeting. In prepared remarks for the meeting, new Chief Executive Oswald Gruebel said the bank knows where it has to set to work. "It will be a long road back to success without any quick fixes," said Gruebel. "Rather, we will move forward step by step in a rigorous and disciplined manner." The bank, which already has suffered billions of dollars of losses over the past two years and received a bailout from the Swiss government, said it "estimates that it will report a loss attributable to shareholders of almost 2 billion francs in first quarter 2009." It said the shortfall is due mostly to losses of about 3.9 billion francs on previously disclosed bad investments, credit loss expenses and adjustment in values of toxic assets. The company's share price plunged as much as 8.7 percent in early trading on the Zurich exchange, before recovering somewhat to fall only 0.8 percent to 13.16 francs ($11.46). UBS said its wealth management and Swiss bank division recorded an outflow of net new money totaling 23 billion francs. That occurred mainly after the announcement of a settlement with U.S. authorities over their investigation into UBS's alleged assistance to wealthy Americans seeking to avoid paying U.S. taxes. At the same time it said its wealth management Americas unit recorded net new money of around 16 billion francs. The bank said it still expects to have a tier 1 capital ratio of about 10 percent at the end of the first quarter. The bank said the job cuts would be unavoidable because it needs to have cost savings in all areas. "UBS expects to reduce the number of its employees to about 67,500 in 2010," a statement said. "At the end of March 2009 UBS employed 76,200 people in over 50 countries." The bank said it would continue to reduce risks and was conducting a review to decide which high-risk and unpromising businesses it will exit. UBS has been in a showdown with Washington over wealthy American tax evaders. It has provided U.S. investigators the bank details of up to 300 wealthy Americans suspected of tax fraud, but has refused to identify about 50,000 more U.S. account holders Washington wants. The Swiss bank has previously announced a $780 million fine and restitution package agreed with U.S. authorities to settle the tax evasion investigation. Full first-quarter results and other details about the bank's plans will be released May 5, it said http://www.cnbc.com/id/30220039
