Swiss Bank UBS 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 (€2.78 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 per cent starting in 2015, compared with a previous goal of 12 per cent to 17 per cent.
Chief executive officer Sergio Ermotti is overhauling UBS as stricter capital requirements and sluggish client activity hurt profit at the investment bank.
UBS will focus more on its wealth management business, the world's second largest, to boost returns for shareholders.
"This is a very bold move," Christopher Wheeler, a London-based analyst at Mediobanca SpA, said before today's release.
"It will take time and the execution risk will be high. In the longer term, if it works it will leave a business that is a cash cow."
UBS rose 7.3 per cent to 13.12 francs in Swiss trading yesterday after news reports on the company's reorganisation plans.
The stock is up 17 per cent this year, compared with a 15 per cent gain in the Bloomberg Europe Banks and Financial Services Index, which tracks 38 companies.
The bank posted a net loss of 2.17 billion francs in the third quarter, compared with a profit of 1.02 billion francs a year earlier, after booking a pre-tax impairment charge of 3.1 billion francs related to goodwill and other non-financial assets associated with the investment bank.
Bloomberg