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Swiss bank UBS announces layoff of 10,000 employees

By Catholic Online (NEWS CONSORTIUM)
October 30th, 2012
Catholic Online (www.catholic.org)

Swiss bank UBS has announced it will layoff 10,000 employees in an attempt to reduce its investment banking activities. The announcement made this week came along with huge losses in its third-quarter results. The positions will be thinned out over the next three years, and amount to 16 percent of its current workforce of 64,000.

LOS ANGELES, CA (Catholic Online) - The Zurich-based firm says that as part of the cost-cutting drive it "is likely to have a headcount of around 54,000" by 2015, down from its current 64,000 employees among 57 countries.

UBS posted a net profit loss $2.31 billion, compared with a profit of $1.13 billion during the same three-month period  that ended in September of last year.

"This decision has been a difficult one, particularly in a business such as ours that is all about its people," UBS Chief Executive Sergio Ermotti said.

"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect."

UBS called it "a significant acceleration" in its transformation. The firm says it will now sharpen its focus on the investment bank and appoint a new executive to lead it.

The bank attributed some of the declining profit to a pretax charge of $920 million linked to an accounting rule on how banks must value their debt.

Banks can possibly post gains if the value of their debt falls, as theoretically become cheaper for the bank to repurchase that debt.

This rule also says that when a bank's debt increases, it must take a write-down because it would theoretically have to pay more to buy back its own debt on the open market.

In advance of the cuts, the value of UBS's stock rose 7.3 percent to close at 13.12 Swiss francs on the Zurich exchange.

One of the banks hardest hit during the global financial crisis, UBS lost $42 billion during the financial crisis and had to be bailed out by the Swiss government.

Then in 2011 it lost a further $2.3 billion due to the activities of Kweku Adoboli, an alleged rogue trader.

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