GENEVA – In a story Oct. 30 about the Swiss bank UBS, The Associated Press reported erroneously that the bank will cut 3,000 jobs at its U.S. operations in Stamford, Conn. The bank says it did not give an exact U.S. figure and not all the U.S. job cuts will be in Stamford.
A corrected version of the story is below:
UBS slashes business in turnaround bid
Swiss bank UBS to cut 10,000 jobs as it ends some trading operations, trims investment banking
By JOHN HEILPRIN
GENEVA (AP) — Scarred by scandals and losses, Swiss bank UBS unveiled Tuesday a plan to overhaul its global operations that will see it cut thousands of jobs as it drops risky trading activities and restructures its investment banking unit.
Switzerland's biggest bank has for years been trying to reshape its business and clean up its image as it tries to recover from a damaging U.S. tax evasion dispute, a scandal over unauthorized trades and a slew of bad investments.
Tuesday's plan represented a sudden acceleration in this turnaround effort.
UBS AG will cut 10,000 jobs, on top of 3,500 shed last year, as it drops out of trading in fixed income — which includes bonds and currencies — and rejiggers its investment banking.
The bank said it will cut 2,500 jobs in Switzerland and the rest in London and the United States.
The need to restructure the investment banking unit was apparent in the bank's third quarter earnings, released Tuesday. UBS made a 2.17 billion Swiss francs ($2.31 billion) loss in the July to September period, down from a profit of 1.02 billion francs the year before, mainly due to a loss of 3.1 billion francs in investment banking.
"It can't get better than this point for us to act," Ermotti said.
With 63,745 employees in 57 countries, UBS said it aims for a headcount of 54,000 in 2015.
Investors welcomed the restructuring announcement, focusing on the savings it will create. UBS stock rose 5.9 percent to 13.89 francs on Tuesday — on top of a 7.3 percent rise on Monday on speculation over the cuts.
Boston University finance expert Mark Williams said UBS "should be applauded for exiting fixed income trading and refocusing on its core competencies."
In what it called "a significant acceleration" in its transformation, the bank said it would sharpen its focus in the investment bank and appoint a new executive, Andrea Orcel, formerly of Bank of America Corp., to lead it.
The current co-head of the investment bank, Carsten Kengeter, is stepping down from the group's executive board to unwind the non-core assets.
UBS said it plans to save 3.4 billion francs in costs through 2015 which, when added to the bank's previous reductions, should amount to annual cost savings of 5.4 billion francs during the same timeframe. That will help offset reorganization costs of 3.3 billion francs over the next three years, including about a half-billion francs in the fourth quarter.
The bank has been under fire on a number of fronts.
In 2008, it was forced to seek a bailout from the Swiss government when it was hard hit by the financial crisis and its fixed-income unit had more than $50 billion in losses.
Former UBS trader Kweku Adoboli has been facing trial in London this month on charges of committing fraud that cost the bank $2.3 billion. He has told the jury that the losses came after senior traders persuaded him to change from a bearish to a bullish point of view in July 2011.
U.S. authorities fined UBS $780 million in 2009 because for helping U.S. citizens avoid paying taxes. The U.S. government has since then been pushing Switzerland to loosen its rules on banking secrecy.
In April, Ermotti said Switzerland's tax disputes with the United States and some European nations are "an economic war" putting 20,000 jobs at risk.
UBS is also one of several global banks being investigated in the U.S. and other countries for alleged rigging of a benchmark interest rate known as Libor, or London Interbank Offered Rate.
The investment banking unit, meanwhile, is struggling to meet new global rules for banks' capital reserves.
The new rules require banks to increase the amount of capital they hold to offset risky assets on their balance sheets. That hurts profitability — in the third quarter, UBS booked a charge of 863 million francs to account for these new rules.
Ermotti said the restructuring of the investment banking unit did not represent a retreat by UBS in that field.
UBS investment banking will "continue to be a significant global player," he said.