UBS AG, Switzerland’s biggest bank, will cut about 10,000 jobs and retreat from capital-intensive trading businesses at the investment bank to boost profitability.
The bank plans to save about 3.4 billion Swiss francs ($3.6 billion) in additional annual costs by the end of 2015 as it reduces headcount to about 54,000, Zurich-based UBS said in a statement today. The company will target a return on equity of at least 15 percent starting in 2015, compared with a previous goal of 12 percent to 17 percent.
The investment bank posted a pretax loss of 2.87 billion francs compared with a 2.1 billion-franc loss a year ago, when it booked a loss from unauthorized trading. Wealth management units attracted 12.3 billion francs in net new funds from clients. The bank’s Basel III common equity ratio rose to 9.3 percent from 8.8 percent in the second quarter.
Ermotti said Kengeter has a “very important role” in the revamp and that he has confidence the investment-banker will stay to see his task through. Ermotti declined to say whether the reorganization will result in departures of business heads.
UBS, which paid its first cash dividend in five years for 2011, amounting to 10 centimes a share, said it plans in the future to pay out more than 50 percent of earnings to shareholders, depending on its capital needs. The bank aims to achieve the 13 percent Basel III common equity ratio in 2014.
Swiss Bank Corp. bought S.G. Warburg & Co., the advisory firm founded by Siegmund Warburg, in 1995, before joining with Union Bank of Switzerland to form UBS in a deal completed in 1998.