UBS loss biggest in Swiss corporate history
Tue Feb 10, 2009 11:57am EST
By Lisa Jucca
ZURICH (Reuters) - UBS posted the biggest annual corporate loss in Swiss history and said it would cut a further 2,000 investment banking jobs as it looks to rebuild its damaged wealth management brand and overcome the credit crisis.
Client withdrawals at the Swiss bank's core wealth management arm accelerated in the fourth quarter. But UBS said net new money turned positive in both wealth and asset management in January, a first positive indicator after three negative quarters.
The news that UBS was winning back some rich clients and the bank's commitment to return to profit in 2009 helped lift shares as much as 10 percent, although trade was volatile.
"No doubt the trends in the fourth quarter were quite weak," said Andreas Weese, an analyst at UniCredit. "But the positive net new money in January is giving the market some confidence that the worst is behind."
UBS, the world's biggest banker to the rich, was one of the first to be hit by subprime woes, as a disastrous expansion into investment banking forced it to write down $49 billion and shattered its reputation for Swiss solidity.
On Tuesday, it reported a bigger-than-expected 8.1 billion Swiss franc ($7 billion) net loss in the fourth quarter and an annual loss of 19.7 billion francs, the biggest ever by a Swiss company and above predictions for 18.7 billion francs.
The quarterly loss came on the back of a hefty 8.8 billion Swiss franc trading loss, as well as charges it made for selling billions in toxic assets to the Swiss National Bank when it was rescued by the state in October.
Chief Executive Marcle Rohner told journalists that UBS was not paying a dividend on 2008 results but still aims to return to profit in 2009 after seeing some positive signs in January.
"While we leave a bad year behind us... we can nevertheless report substantial progress," Rohner said.
"We had an encouraging start into the new year but the environment will remain difficult and volatile as the real economy has not seen the worst yet."
Trade in UBS stock were up 10.2 percent at 1455 GMT (9:55 a.m. EST), one of the best-performing stocks in the DJ Stoxx European banking index, which was up 0.9 percent.
"UBS indicates a strong start into 2009 and a reversal of the money flows. We remain skeptical as the clean-up of the mess will take several quarters," Dirk Becker, Kepler Capital Markets analyst, said in a note.
FURTHER RESTRUCTURING
Rohner said the fourth quarter had seen the "worst environment ever for investment banking" but said UBS remained committed to the business even as it continues to shed jobs.
UBS aims to shrink its investment bank to 15,000, bringing the bank's total workforce to around 75,000 -- a size Rohner says would be appropriate for UBS -- by mid-2009 from 77,000 now. UBS has already announced 7,500 job cuts in the crisis.
Tue Feb 10, 2009 11:57am EST
By Lisa Jucca
ZURICH (Reuters) - UBS posted the biggest annual corporate loss in Swiss history and said it would cut a further 2,000 investment banking jobs as it looks to rebuild its damaged wealth management brand and overcome the credit crisis.
Client withdrawals at the Swiss bank's core wealth management arm accelerated in the fourth quarter. But UBS said net new money turned positive in both wealth and asset management in January, a first positive indicator after three negative quarters.
The news that UBS was winning back some rich clients and the bank's commitment to return to profit in 2009 helped lift shares as much as 10 percent, although trade was volatile.
"No doubt the trends in the fourth quarter were quite weak," said Andreas Weese, an analyst at UniCredit. "But the positive net new money in January is giving the market some confidence that the worst is behind."
UBS, the world's biggest banker to the rich, was one of the first to be hit by subprime woes, as a disastrous expansion into investment banking forced it to write down $49 billion and shattered its reputation for Swiss solidity.
On Tuesday, it reported a bigger-than-expected 8.1 billion Swiss franc ($7 billion) net loss in the fourth quarter and an annual loss of 19.7 billion francs, the biggest ever by a Swiss company and above predictions for 18.7 billion francs.
The quarterly loss came on the back of a hefty 8.8 billion Swiss franc trading loss, as well as charges it made for selling billions in toxic assets to the Swiss National Bank when it was rescued by the state in October.
Chief Executive Marcle Rohner told journalists that UBS was not paying a dividend on 2008 results but still aims to return to profit in 2009 after seeing some positive signs in January.
"While we leave a bad year behind us... we can nevertheless report substantial progress," Rohner said.
"We had an encouraging start into the new year but the environment will remain difficult and volatile as the real economy has not seen the worst yet."
Trade in UBS stock were up 10.2 percent at 1455 GMT (9:55 a.m. EST), one of the best-performing stocks in the DJ Stoxx European banking index, which was up 0.9 percent.
"UBS indicates a strong start into 2009 and a reversal of the money flows. We remain skeptical as the clean-up of the mess will take several quarters," Dirk Becker, Kepler Capital Markets analyst, said in a note.
FURTHER RESTRUCTURING
Rohner said the fourth quarter had seen the "worst environment ever for investment banking" but said UBS remained committed to the business even as it continues to shed jobs.
UBS aims to shrink its investment bank to 15,000, bringing the bank's total workforce to around 75,000 -- a size Rohner says would be appropriate for UBS -- by mid-2009 from 77,000 now. UBS has already announced 7,500 job cuts in the crisis.
