The Subprime Fall-out Continues as UBS is Set to Cut 5,500 Jobs
Swiss wealth-management behemoth UBS will be cutting 5,500 jobs, one of the biggest purges seen so far in the financial markets crisis.
Additionally, UBS stated that it has a preliminary deal with U.S. asset manager BlackRock to sell a $15 billion portfolio of subprime mortgages, in what the bank said was a signal the market for ailing U.S. real-estate loans is recovering.
UBS had already cut 1,5000 jobs and the latest 5,500 staff cuts and will represent a reduction of 18 percent of total group headcount since mid 2007, the bank said.
The asset sale agreement with BlackRock offered light at the end of the tunnel in the market for risky mortgage assets, according to UBS Chief Executive Marcel Rohner.
"We see clearly that there are sophisticated investors coming into this market, and this in itself we view as strong support," Rohner said in a conference call with journalists on Tuesday.
UBS cautioned that conditions in financial markets were still tough, and it declined to offer any results forecast.
But the group said it did not need to raise more capital beyond existing measures that total around 39 billion Swiss francs.
"The same is true for UBS as for the entire sector: The worst is likely over," said analysts at bank Wegelin.
"However, there is little momentum for the future. Even if the job cuts are able to lower costs, the current outlook is anything but rosy."
UBS staff are among the first to feel the severe pinch of the credit crisis and many of those made redundant will enter a difficult jobs market.
Published on May 6, 2008
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