UBS to layoff 8,700 after $1.7B Loss in Q1 of 09

As if banking industry was already not facing enough of tough times, another major financial crisis has put lives and living of thousands in dole drum. USB AG Switzerland’s largest bank is facing huge losses and released details which show that it expects a first quarter loss of 1.75 Billion Dollars. It released its statement on Wednesday before the commencement of annual shareholders meeting. UBS is planning on drastically shrinking its investment banking sector (where most of the losses were reported), by cutting thousands of jobs as it abandons parts of its debt and commodity businesses.

In order to recover, UBS AG is also expected to cut a around 8700 jobs by the end of next year, due to the first quarter loss of almost 2 billion Swiss francs ($1.75 billion). The bank has been hit hard by subprime-related losses, says it will fine-tune its organizational size to the fluctuating market conditions and cut back on levels of business.

The banking giant is facing problems in two areas including profitability, because it has been hit severely by the mortgage crisis, and in battle with the US government over the bank’s secret offshore accounts.

The banking giant suffered steep losses in 2008 in mortgage investments and despite adopting several tactics, has failed to save itself from financial crisis. However, thanks to reduction of its balance sheet and risk-weighted assets, UBS AG, despite its quarterly losses, expects to have a tier 1 capital ratio of roughly 10% by the end of March 2009. UBS is planning cost savings by the end of 2010 of approximately 3.5 to 4 billion francs compared with 2008 levels.

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