UBS to Slash 2000 Investment Banking Jobs by 2016

On Thursday, global financial service company UBS

announced in its 2011 Investor Day that they are preparing to cut 1,500 jobs in its Investment Banking division by the end of 2013 and an additional 500 jobs by the end of 2016. UBS's Investment Banking division currently has approximately 18,000 workers and plans to trim the workforce to 16,000 by the end of 2016, with about 45% of the reductions to take place by the end of 2012. According to UBS, its strategy is centered on the long-standing leadership positions of its global wealth management businesses and its universal bank in Switzerland. Together with a focused, less complex and less capital-intensive Investment Bank and a strong Global Asset Management business, UBS will drive further growth and expand its premier wealth management franchise. UBS's CEO Sergio Ermotti said in a statement, “UBS is acting from a position of strength and we are adapting our strategy to deliver more attractive returns to shareholders and to reflect economic and regulatory change. We have chosen to substantially reduce the risk profile of the bank by exiting and downsizing businesses which are not value added to our client franchise or deliver unattractive risk-adjusted returns. The Board and I are convinced that this strategy plays to our strengths and is focused firmly on the needs of our clients." He further continued to say, "We will continue to invest in products and geographies where we see opportunities to grow, particularly in our wealth management businesses. We plan to generate a greater share of our profits from businesses that deliver more consistent results and, together with a reduction in risk and tighter cost management, we aim to deliver more attractive returns to our shareholders. We are confident that we can deliver a return on equity between 12% and 17% and we are determined to return capital to our shareholders.” After announcing these developments from its 2011 Investor Day, shares of UBS spiked higher as investors believed these reductions will add to the company's bottom line. The stock moved from about $11.43 to about $11.62, or almost 2%. Currently, shares of UBS are down 1.1% at $11.39. Analysts are expecting UBS's 2012 EPS to be $1.64 per share on revenues of $33.28 billion. UBS AG, a financial services firm, provides wealth management, asset management, and investment banking products and services to private, corporate, and institutional clients worldwide.