|Bradley Keoun and Elena Logutenkova|
Many of the reductions will come in the trading businesses overseen by investment-bank co-head
Chief Executive Officer
“It was a loser’s game for them,” said
Ermotti told his staff in a memo this month he’ll do whatever it takes “to tackle the current challenging market environment and paradigm shift” in banking and will continue “remodeling” UBS. He said in July that the market environment has completely changed since the firm announced reorganization plans for the securities unit in November.
“UBS is a microcosm for the industry,”
The bank had about 63,250 employees as of
The plan will lead to a further reduction of as much as
The remaining businesses at the investment bank will include a slimmed-down advisory unit, equities trading and research, foreign exchange, government debt trading and limited credit and corporate bond trading, according to the person familiar with the bank’s plans. Capital demands by Swiss regulators, among the strictest in the world, are making it hard for UBS to compete in capital-intensive businesses such as fixed-income trading.
“UBS is going back to its roots, becoming an equity house with a strong equity capital markets franchise,” said
The staff cuts were reported earlier by the Financial Times. The eliminations will lead to changes in senior management and reduce costs in the bank’s support functions including information technology, the FT said.
The changes at the investment bank may mean a bigger role for 49-year-old
The firm’s boards met in
The investment bank has suffered lapses that shook
“Investors want UBS to reveal the value of the asset and wealth management businesses, which will make 26 percent returns on our 2013 estimates, and downsize materially the investment bank, which struggles to make single-digit returns,” said
Lack of demand in the banking industry means another round of dismissals is likely on
“People will have a while on the beach,” he said. “Their business has been commoditized to the point where their brains don’t count as much. A lot of investment bankers will have to find another way to make money.”
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