UBS Surges After Announcing 10,000 Job Cuts
Swiss bank UBS (NYSE: UBS) released its fiscal third-quarter earnings results and announced plans to lay off as many as 10,000 employees on Tuesday. On Wednesday, the stock is surging on the news and was last trading up 13.50 percent to $14.97. The cost cutting moves are in response to the fallout of the European sovereign debt crisis and a difficult economy in Europe.
The bank is looking to focus more on its wealth management business and cut its riskier operations. The bulk of the cuts will reportedly take place in the company's investment banking unit. The reduction amounts to around 16 percent of UBS' workforce and would bring the total number of employees at the bank down to 54,000. ‘This decision has been a difficult one,'' CEO Sergio Ermotti said in a statement. ‘‘Some reductions will result from natural attrition, and we will take whatever measures we can to mitigate the overall effect.''
According to Ermotti, up to 45 percent of the layoffs, or some 4,500 jobs, will be in UBS' London offices. A further 2,500 jobs will be cut in Switzerland. The bank's restructuring plan will help to reduce expenses by $3.6 billion by 2015.
The cuts to Swiss bank's investment banking unit will be focused primarily in fixed-income businesses which had become unprofitable. The trimmed down investment bank will be headed by Andrea Orcel who left Bank of America (NYSE: BAC) last year to join UBS. In the third-quarter, UBS reported a net loss of 2.17 billion Swiss francs, which compares to a profit of 1.02 billion Swiss francs last year.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.