Swiss UBS to cut 5,500 jobs in subprime wake

UBS said conditions in the financial markets and the global economy remained difficult and reported a first-quarter loss of 11.535 billion Swiss francs ($10.93 billion), slightly better than what it had already announced in April.

The bank recorded net inflows in its two wealth management businesses of 5.6 billion francs, according to a statement on Tuesday. Analysts polled by Reuters on average had expected inflows of 9 billion and a net loss of 11.9 billion.

UBS is Europe's biggest banking sector casualty of the subprime crisis after posting over $37 billion in writedowns. The crisis ripped a hole in UBS's balance sheet and exposed widespread weaknesses in strategy, risk control and management culture.

UBS has since pared its ambitions, swept out senior management, and raised around 39 billion francs in new capital.

Tuesday's announcements mark the largest effort made to date by the bank to reshape itself and face a downturn in the investment banking sector.

UBS was widely expected to slash around 10 percent of its investment banking workforce of 22,000.

Pressure remains on UBS to do more, with activist investor group Olivant criticizing UBS's choice of lawyer Peter Kurer as its new chairman, and calling on the bank to consider selling off its investment bank.

UBS shares have risen around 15 percent in the past month, compared with a rise of roughly 3 percent in the Dow Jones European banking sector index , making it the biggest heavyweight gainer as confidence returns to the financial markets.

Prior to the recent rally, UBS was the biggest share price loser among heavyweight blue chips.

Analysts expect the bank to post a net loss of over 5 billion Swiss francs in 2008 on the back of subprime writedowns, restructuring costs and lower earnings.

Photo:Reuters