ZURICH (Dow Jones)--UBS AG (UBS), hit by the effects of the global economic crisis and a crackdown by U.S. tax authorities, Wednesday said it expects to report a first-quarter net loss of nearly 2 billion Swiss francs ($1.75 billion) and that it will slash over 11% of its workforce to cut costs.
Chief Executive Oswald Gruebel said UBS' outlook remains cautious because of the many uncertainties that the Zurich-based bank faces.
UBS said it had roughly CHF3.9 billion in write-downs in the first quarter related to illiquid securities, expenses for credit losses, and the lower value of assets on the remaining positions transferred to the Swiss National Bank as part of a government shore-up. Both the quarterly net loss and write-downs were wider than analysts had expected. Full earnings are scheduled May 5. UBS reported a net loss of CHF20.89 billion for the full year of 2008.
Under Gruebel, who was installed as CEO six weeks ago, UBS aims for cost savings of CHF3.5 billion to CHF4 billion by the end of 2010 over costs in 2008, when the bank spent CHF28.56 billion, translating to cuts of up to 14%.
A large chunk of this will be achieved through 8,700 job cuts, with UBS expecting to reduce overall staff to 67,500 from 76,200 at the end of March. Home market Switzerland accounts for 2,500 of the jobs to go, with up to 1,500 formal layoffs "unavoidable," the bank said.
UBS has cut roughly 11,170 jobs since it began writing down mortgage-related securities, not including the 8,700 announced Wednesday.
UBS said its Tier 1 ratio - a measure of capital strength - will dip to roughly 10% at the end of March, which is seen by analysts as the lower end of what UBS needs, from 11.5% at year-end.
"This raises the question of whether more capital will be needed," Credit Sights analyst Simon Adamson wrote.
Gruebel seemed to acknowledge the thin capital, saying UBS will do whatever is necessary to "immediately protect and strengthen our capital base."
"Markets remain extremely unstable, and we will not simply wait and hope for better times," Gruebel told shareholders, whom he addressed for the first time Wednesday.
Chief Executive Oswald Gruebel said UBS' outlook remains cautious because of the many uncertainties that the Zurich-based bank faces.
UBS said it had roughly CHF3.9 billion in write-downs in the first quarter related to illiquid securities, expenses for credit losses, and the lower value of assets on the remaining positions transferred to the Swiss National Bank as part of a government shore-up. Both the quarterly net loss and write-downs were wider than analysts had expected. Full earnings are scheduled May 5. UBS reported a net loss of CHF20.89 billion for the full year of 2008.
Under Gruebel, who was installed as CEO six weeks ago, UBS aims for cost savings of CHF3.5 billion to CHF4 billion by the end of 2010 over costs in 2008, when the bank spent CHF28.56 billion, translating to cuts of up to 14%.
A large chunk of this will be achieved through 8,700 job cuts, with UBS expecting to reduce overall staff to 67,500 from 76,200 at the end of March. Home market Switzerland accounts for 2,500 of the jobs to go, with up to 1,500 formal layoffs "unavoidable," the bank said.
UBS has cut roughly 11,170 jobs since it began writing down mortgage-related securities, not including the 8,700 announced Wednesday.
UBS said its Tier 1 ratio - a measure of capital strength - will dip to roughly 10% at the end of March, which is seen by analysts as the lower end of what UBS needs, from 11.5% at year-end.
"This raises the question of whether more capital will be needed," Credit Sights analyst Simon Adamson wrote.
Gruebel seemed to acknowledge the thin capital, saying UBS will do whatever is necessary to "immediately protect and strengthen our capital base."
"Markets remain extremely unstable, and we will not simply wait and hope for better times," Gruebel told shareholders, whom he addressed for the first time Wednesday.
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