UBS Q1 U.S.-mortgage-market losses $19B

Discussion in 'Stocks' started by ASusilovic, May 6, 2008.

  1. UBS AG, the European bank with the highest losses from the U.S. subprime crisis, said it will cut as many as 12 percent of jobs at the securities unit after an 11.5 billion-franc ($10.9 billion) first-quarter loss.

    UBS will eliminate as many as 2,600 jobs at the division by the end of the year, the Zurich-based bank said in an e-mailed statement today. Headcount at the company overall will fall by 5,500 by mid-2009. The quarterly loss, which follows writedowns of $19 billion, is in line with the bank's estimate on April 1 and compares with a 3.03 billion-franc profit a year earlier.

    The job cuts are on top of 48,000 reductions announced by the world's biggest banks and securities firms in the past year, as writedowns and losses from the U.S. subprime crisis swelled to $319 billion. UBS Chief Executive Officer Marcel Rohner pledged last month to return the investment bank to ``sustainable'' growth by simplifying and reducing the debt business.

    ``In the coming quarters and potentially even years, the securities industry will have to live with lower transactions and lower commissions,'' said Paul Vrouwes, a fund manager at ING Investment Management who helps oversee about $23 billion, including UBS shares. ``If the damage from investment-banking losses to the UBS brand name is high, it's very likely that there will be cost measures also at the private bank.''

    UBS, the world's biggest wealth manager, already eliminated 1,500 jobs in the investment bank at the end of last year. The bank brought in Jerker Johansson from Morgan Stanley as new head of the investment bank in mid-March to help revamp the unit and said last month it will put assets related to U.S. residential real estate into a separate division that may be spun off later.

  2. I think it's already priced in as of April 1 when they estimate 12Billion lost.
  3. UBS to cut 5,500 jobs, sell assets to BlackRock fund
    First-quarter loss of 11.5 bln Swiss francs matches earlier warning
    By Simon Kennedy, MarketWatch
    Last update: 4:24 a.m. EDT May 6, 2008Print E-mail RSS Disable Live Quotes
    LONDON (MarketWatch) -- Troubled Swiss banking group UBS said Tuesday that it plans to cut 5,500 jobs and sell a $15 billion chunk of its risky mortgage assets to BlackRock Inc. as it reported a first-quarter loss broadly in line with an earlier warning.
    The group posted a loss of 11.54 billion Swiss francs ($10.99 billion), compared to a profit of 3.03 billion francs a year earlier, driven by write-downs of $19 billion. The bank had disclosed the write-downs at the start of April and said it would report a loss of around 12 billion francs. See archived story.
    UBS (CH:002489948: news, chart, profile) (UBS:UBS Ag
    News, chart, profile, more

    UBS 34.31, -0.49, -1.4%) said it's planning to cut 2,600 jobs in its investment banking unit by the end of the year and around 5,500 across the group by the middle of 2009.
    Jerker Johansson, head of investment banking, said most of the cuts will be in its fixed-income business and the investment banking headcount will eventually be about 18% below its peak in the middle of 2007.
    Johansson added that the group has agreed in principle to sell a $15 billion portfolio to a newly-created distressed-asset fund run by BlackRock Inc. (BLK:BlackRock Inc

    BLK 215.40, -0.85, -0.4%) . The assets being sold have a nominal value of around $22 billion and are being sold at roughly the price they had been marked-down to on UBS' balance sheet.
    Johansson said it will sell the portfolio to the fund and will then "partially finance" the fund. After its tough first quarter, UBS also gave a downbeat outlook and said it will have to focus closely on controlling costs as the economy worsens.
    "UBS expects this difficult environment to remain and be characterized by a continuing unfavorable global economic climate, de-leveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity" the bank said.
    Shares in the group dropped 3.8% in early trading. The stock is down nearly 30% since the start of the year. Shares in rival Credit Suisse Group (CS:credit suisse group sponsored adr
    News, chart, profile, more
    Last: 55.27-0.22-0.40%

    CS 55.27, -0.22, -0.4%) were down 1.5% in Swiss trading.
    UBS has been the worst-hit European bank in the credit crisis after building up huge positions in subprime and other risky U.S. mortgages. It said in April it would have to sell around $15 billion of new shares to strengthen its balance sheet, having already raised around $13 billion from selling stakes to the government of Singapore and a Middle East investor.
    The group has taken around $37 billion in write-downs since the credit crisis began. In an April report into its failures, the bank placed much of the blame on a culture that focused on boosting revenue without keeping track of rising risks. See archived story.
    Those failures cost Chairman Marcel Ospel his job earlier in the year. However, his replacement, then-general counsel Peter Kurer, has already come under fire from some investors for not being independent and not having the necessary experience of running a major financial institution.
    Simon Kennedy is the City correspondent for MarketWatch in London.
  4. Stupid Europeans buying toxic waste.