Berne, (Switzerland): Two Swiss banks –UBS AG and Credit Suisse Group—have planned to reduce the jobs by 5,500 by the end of 2013 in order to meet the financial crunch and economic uncertainty across the globe.
Swiss banking giant UBS AG on Tuesday said it would reduce about 3,500 jobs as part of its already announced plans to cut costs of approximately 2 billion Swiss francs annually by the end of 2013.
While announcing a 49 percent drop in its second-quarter profit on July 26, the bank had said that the ongoing economic uncertainty is likely to make it miss its pre-tax profit target set in 2009 in its original time frame of 3 to 5 years, although it expects to deliver higher profitability.
The company also had said then that it plans to eliminate 1.5 billion – 2 billion francs in costs in the next 2 to 3 years, but will invest in growth areas.
With these cost reduction plans, the company expects to recognize restructuring charges of about 550 million francs, majority of which will be in the third quarter.
Domestic rival Credit Suisse Group also announced about 2,000 job cuts in July as part of its efforts to save 1 billion francs in costs, after it witnessed a 52 percent plunge in second-quarter profit amid low levels of client activity and a difficult trading environment.
Regarding its cost reduction plans, UBS today said it aims savings associated with headcount reductions and further real estate rationalization. The job cuts will be achieved through redundancies as well as natural attrition.
Of the expected staff reductions, about 45 percent will come from the Investment Bank, 35 percent from Wealth Management & Swiss Bank, 10 percent from Global Asset Management and 10 percent from Wealth Management Americas, UBS said.
Regarding the expected charges, the company noted that approximately 400 million francs would reflect costs related to personnel and 150 million francs related to real estate.
Of these charges, about 55 percent would be incurred in the Investment Bank, 30 percent in Wealth Management & Swiss Bank, 10 percent in Global Asset Management, and 5 percent in Wealth Management Americas.
The bank noted that about 450 million francs of the total charges will be booked in the second half, of which a substantial majority will be in the third quarter.
The bank’s second-quarter results were hit primarily by Investment Banking performance, which was impacted by declining client volumes and lower trading income, especially in Fixed Income, Currency and Commodities division.
Regarding its future, UBS earlier had said, “Current economic uncertainty shows little sign of abating. We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday season, and expect these conditions to continue to constrain our results.”