UBS AG (UBSN), Switzerland’s biggest bank, plans to cut about 80 to 90 jobs in its European investment- banking division as part of a global revamp, according to two people familiar with the matter.
The cutbacks, which are likely to take place before year- end, would amount to about 17 percent of staff within the region’s investment-banking division and include junior and senior bankers, said the people, who asked not to be identified because the plans are private. The division includes merger advisory and equity and debt capital markets.
The reductions probably will kick off a fresh round of job cuts within the broader investment bank, which includes UBS’s fixed-income and equities units, said the people. Pretax profit at the investment bank, which employed 16,432 globally at the end of June, slumped 55 percent in the first half from a year earlier. The Zurich-based firm, which said last year it would trim about 1,600 jobs at the unit, speeded up those plans and has already reached the headcount target it had set for the end of 2013. Further cuts may amount to more than 10 percent of the investment bank’s staff, estimated one person.
“Back in November of last year, I don’t think that even a pessimistic outlook for the next 12 months would tell you what we are living in,” Chief Executive Officer Sergio Ermotti said on July 31. “The environment has completely changed. We have been very proactive in accelerating taking down costs as we saw the new environment developing and we will not be shy to continue to do so as we see the market changing.”
Ermotti told Swiss newspaper Finanz und Wirtschaft in an interview published Sept. 15 that the bank will continue to trim jobs at the securities unit to adjust to “the new reality,” and that the cuts would affect people in the front office as well as in supporting functions.
Dominik Von Arx, a UBS spokesman in London, declined to comment.
The City of London and Canary Wharf financial districts, which house the European headquarters of securities firms, have pared staff as the sovereign debt crisis curbs trading and leads to a slump in stock and bond offerings. Financial-services firms in Western Europe announced 32,426 job cuts this year, according to data compiled by Bloomberg.
Deutsche Bank AG (DBK) said in July that it will eliminate as many as 1,900 jobs, mostly outside Germany, including 1,500 at the investment bank and support areas. Co-CEO Juergen Fitschen said last week there will be more reductions than previously announced, without elaborating.
UBS’s cuts at the investment bank have so far mostly focused on the fixed-income business, where stricter capital rules and Europe’s debt crisis are eroding profitability. The bank changed leadership at its equities unit in October when Francois Gouws and Yassine Bouhara resigned after a $2.3 billion loss from unauthorized trading.
UBS hired Andrea Orcel, a top dealmaker at Bank of America Corp., to co-head the investment bank with Carsten Kengeter and help revamp the firm’s advisory business.
“There is no doubt that many City institutions are encountering difficult times due to the general macro situation, but UBS is encountering some particular challenges,” said John Purcell, founder of London-based executive-search firm Purcell & Co. “With overall employment levels in the City forecast to contract by 11 percent in 2012, the immediate future does not look particularly rosy.”
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