UBS to cut 400 investment banking jobs

UBS is embarking on a new round of job cuts within its investment bank, according to people familiar with the matter, as the Swiss bank grapples with a downturn in business that shows few signs of abating and considers a further restructuring of the division.

UBS will begin notifying employees today of a new round of job cuts totaling roughly 400, the people said.

Additional job losses at the bank may quickly follow as, according to one of the people, there is a "good probability" that when UBS discloses its third quarter results next Tuesday, it will make clear which businesses it intends to focus on in the years to come, and which ones it will de-emphasise.

No decisions have been made on any restructuring and there ultimately may be not be an announcement next week, another person cautioned.

This week's jobs cut will be spread roughly evenly across North America, Europe and Asia, one of the people said. They will fall about evenly on fixed income trading, equity trading and corporate finance, with the latter bearing slightly more of the brunt than the former two divisions.

While these job cuts are mainly about cutting costs, they are also part of a plan to cull the bottom performers among the investment bank's ranks and create room for it to hire more promising talent, one of the people said.

UBS' latest round of headcount trimming comes amid a broad retrenchment on Wall Street, as well as in London and other financial centers around the world.

Most banks have shed thousands of jobs in multiple rounds in the last few years as the persistent struggles of the US economy and continued questions about Europe's financial health crimp business. Key securities businesses from stock underwriting to trading and merger advice are well below their pre-financial crisis levels.

In a difficult stretch for banks, UBS has had a particularly hard time, seeming to lurch from one crisis to another. It lost some $50bn on ill conceived credit bets toward the beginning of the financial crisis, and last year suffered a $2.3bn hit from a rogue trading scandal. That episode precipitated the exit of its chief executive Oswald Grubel, who was replaced by current chief executive Sergio Ermotti.

Showing how rapidly the business environment is eroding, UBS just cut 4,000 jobs in the second half of last year. It had 16,432 employees in investment banking at the end of the second quarter, down from a peak of roughly 24,000 in 2007.

UBS, which once had ambitions to be a top-tier, full service investment bank, now has a more modest goal for the division.

The operation is now largely focused on serving the firm's sprawling wealth management arm, which caters to wealthy individuals and families, and together with the bank's asset management division has some $2 trillion in funds under supervision.

As part of its refocusing of the investment bank, UBS has exited four businesses altogether, including equity proprietary trading. It's not clear whether the shuttering of more units is in the cards.