UBS AG is preparing another round of job cuts across its investment bank in Europe as Chief Executive Officer Sergio Ermotti tries to overhaul the firm, two people with knowledge of the matter said.
UBS is considering cuts in equities and fixed income as it trims its merger advisory staff, bringing total reductions to about 400, or 10 percent of the unit’s front-office employees in the region, said the people, who asked not to be identified because the review is private. The cuts are part of plans to pare back headcount globally, said one of the people.
Ermotti, 52, said in a memo to staff last week he will take “all actions necessary to tackle the current challenging market environment and paradigm shift” in banking and will continue “remodelling” UBS. The Zurich-based firm, which said last year it would trim about 1,600 jobs at the unit, has already reached the staffing goal it set for the end of 2013 as the bank shrinks its securities business to concentrate on wealth management.
“We like the restructuring opportunity at UBS,” said Huw van Steenis, a London-based analyst at Morgan Stanley. The bank would benefit “if it can reduce the return-on-equity drag from the single-digit returns in the investment bank to reveal the value of its wealth franchise, which is currently making 25 percent returns.”
UBS spokesman Dominik von Arx in London declined to comment on job cuts.
The bank plans about 80 to 90 job cuts in the advisory division that includes equity and debt capital markets, people with knowledge of the matter told Bloomberg News on Sept. 19. The cuts are being extended to trading activities, the people said.
Pretax profit at the investment bank, which employed 16,432 globally at the end of June, slumped 55 percent in the first half from a year earlier. JPMorgan Chase & Co. analysts, led by Kian Abouhossein, said in a note to clients on Oct. 10 that they expect “relatively weak” third-quarter results from UBS and a further reorganization of the investment bank.
Goldman Sachs Group Inc. posted a 16 percent decline in equities trading revenue to $1.96 billion in the third quarter from a year earlier, while JPMorgan’s equity-trading revenue, excluding accounting adjustments, was little changed at $1.04 billion. Both New York-based firms, as well as Citigroup Inc., reported higher trading revenue stemming from fixed income.
UBS is scheduled to report third-quarter results Oct. 30.
Financial job cuts in western Europe have exceeded 34,400 this year as firms, including Royal Bank of Scotland Group Plc, UBS and Deutsche Bank AG, eliminated positions amid the sovereign-debt crisis. Financial firms announced more than 61,600 cuts globally this year, data compiled by Bloomberg show.
Nomura Holdings Inc., Japan’s biggest brokerage, is also eliminating about 100 investment-banking jobs in Europe as it unwinds a four-year international expansion, three people with knowledge of the plans said in September. Julius Baer Group Ltd., the Swiss private bank established in 1890, may cut more than 1,000 jobs as it buys Merrill Lynch wealth units outside the U.S. from Bank of America Corp.
Ermotti told Swiss newspaper Finanz und Wirtschaft in an interview published Sept. 15 that the bank will continue to trim jobs at the securities unit to adjust to “the new reality,” and that the cuts would affect people in the front office as well as in supporting functions.