UBS shake-up may see 10,000 jobs go, shares soar

Shares in UBS rose sharply in trading on Monday after weekend reports it could cut 10,000 jobs globally when it announces third quarter results tomorrow (Tuesday).

Reuters reported the share price was up 6.3% at 13.00 francs as of 13.04 UK time.

The gains came as analysts said the reports on job cuts, if correct, would significantly strengthen shareholder returns, and refocus the bank on its core competencies.

The investment banking business in London could take a significant hit from the job cuts. UBS acquired UK investment bank SG Warburg in 1995, and it currently employs some 6,500 staff in the UK’s financial centre.

In the UK, the Sunday Times had reported that UBS’ board was locked in talks about how deep the cuts should be. About two-thirds of the UBS staff in London work for the investment bank, as opposed to its private banking or asset management divisions.

Also under consideration is the idea of splitting out the bank’s fixed income trading businesses to be run by the firm’s co-head of investment banking, Carsten Kengeter, with further speculation that the business may be sold at some point in future.

The equities, foreign exchange and advisory businesses would be kept in a separate unit.

Along with many other financial institutions, UBS suffered during the financial crisis. It took losses of CHF39bn, particularly due to investments in US sub prime debt, and had to seek a bailout from Swiss authorities.

Last year, the bank lost a further CHF2bn at the hands of alleged rogue trader Kweku Adoboli, prompting then chief executive Oswald Gruebel to resign. It is his replacement, Sergio Ermotti, who is expected to push through the changes, which would refocus the bank on its traditional core business areas such as wealth management.

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