UBS said it would axe 2,000 more jobs as part of a tough restructuring after posting the biggest ever annual loss for a Swiss firm, although it said client withdrawals had stopped in January.
UBS reported a CHF 8.1 billion ($6.95 billion) net loss in the fourth quarter, missing a Reuters poll forecast for 7.1 billion. UBS’s loss for 2008 came in at CHF 19.7 billion, above analysts’ predictions for CHF 18.7 billion. The quarterly loss on Tuesday came on the back of a hefty CHF 8.8 billion trading loss, as well as charges it made after selling billions in toxic assets to the Swiss National Bank when it was rescued by the state in October.
CEO Marcel Rohner told journalists that Switzerland’s largest bank was still aiming to return to profit in 2009 after seeing some positive signs in the business environment at the start of this year. “UBS has had an encouraging start to the year,” UBS said in a statement. “However, financial market conditions remain fragile as company and household cash flows continue to deteriorate... Our near-term outlook remains cautious.”
UBS continued to suffer massive outflows in the Q4 at its core wealth management business. But the Swiss bank said net new money had turned positive in both wealth management and asset management in January, the first time after a streak of negative quarters. It did not give details. “Net new money for January looks good,” said Jeremy Sigee, an analyst at Citigroup.
But not everybody was convinced. “In its outlook statement 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.
UBS stock swung sharply early on, rising as much as 7% and falling as low as 1% before trading down 0.85% at €12.79 at 8:47 a.m. British time.
Rohner said UBS will not pay a dividend for 2008. UBS also announced structural changes to refocus the bank on its core Swiss businesses, its global wealth management operation -- the world’s biggest -- and on the growth potential of its onshore business.
UBS said it is creating two new business divisions: Wealth Management & Swiss Bank under the leadership of Franco Morra and Juerg Zeltner, and Wealth Management Americas, led by Marten Hoekstra. All three are members of the board.
UBS also said it was continuing to cut the size of its troubled investment bank, saying it aimed to bring its total staff to about 15,000 from 17,171 now. Rohner, who said the fourth quarter had seen the “worst environment ever for investment banking,” said UBS aimed to cut its overall staff to around 75,000 by mid-2009, from 77,000 now.
UBS said its Tier 1 capital ratio, a key measure of financial strength, rose to 11.5% at the end of 2008 from 10.8% at the end of the third quarter. The Swiss bank giant, which made nearly $49 billion of writedowns in the credit crisis, said it had suffered new money outflows of 58.2 billion Swiss francs at its prized wealth management unit, higher than the previous quarter and forecast.
Rich clients withdrew CHF 49 billion in the Q3 from wealth management. Outflows also continued from its global asset management business in the Q4, but slowed to CHF 27.6 billion from 34.4 billion the previous three months.
UBS did not give details of whether it was inching towards a settlement in a high-profile US investigation into possible tax fraud, in which the Swiss bank is accused of helping rich Americans hide untaxed money in offshore accounts. The company decided to stop providing offshore banking services to US citizens last year.
Separately, the Swiss National Bank said it had brought down the number of toxic assets eligible for transfer to a special central-bank run fund announced in October to help prop up UBS to $39.1 billion from $60 billion. (Reuters)