EUROPEAN banking giant UBS yesterday announced it was to axe an extra 5,500 jobs in one of the biggest employment bloodlettings during the ten-month credit crunch in financial markets.
However, while UBS was not providing regional breakdowns of the redundancies, it is thought speculation that 900 jobs would go from the investment banking operation in the City of London was overdone.
A jobs cull of about 500 in the Square Mile
, where the bank employs 6,000, is now expected.
The latest staff cuts come on top of 1,500 already completed and represent a reduction of 18 per cent of total group headcount since mid-2007, the bank said. UBS is Europe's biggest casualty of the subprime crisis, posting more than $37 billion (£18.7bn) in write-downs.
A spokesman said: "We are not breaking it down geographically but we have said 2,600 are going from the investment bank, primarily from redundancies, in the United States and Europe including the UK."
It is understood areas such as fixed income will be particularly hit.
In addition, 2,900 jobs will go from global wealth management, asset management and administrative services, primarily back office and support staff.
It is believed these cuts will be done more by natural attrition over a period of 15 months. These will also be across all regions, with no breakdown given.
Jerker Johannson, UBS's new head of investment banking, said the lay-offs would target weaker businesses, with some areas being cut by 50 per cent and others, such as the municipal bonds unit, being sold or closed down.
UBS also said it had a preliminary deal with US asset manager BlackRock to sell a $15 billion portfolio of subprime mortgages, in what the bank said was a signal the market for ailing US property loans was recovering.
Marcel Rohner, UBS chief executive, said: "We see clearly that there are sophisticated investors coming into this market, and this in itself we view as strong support."
The bank said it had made a net loss of 11.53bn Swiss francs (£5.58bn) in the first three months of this year, largely as a result of a further $19bn (£9.6bn) of losses from "US real estate and certain structured credit positions". This was slightly better than it had announced in April and less than the SFr11.9bn expected by analysts.
UBS cautioned that conditions in financial markets were still tough, and it declined to offer any results forecast. But the group said it did not need to raise more capital beyond existing measures that total about SFr39bn.
Analysts at bank Wegelin said: "The same is true for UBS as for the entire sector. The worst is likely over. However, there is little momentum for the future. Even if the job cuts are able to lower costs, the current outlook is anything but rosy."
Banks still taking on graduatesINVESTMENT banks have learnt their lesson from the 2003-4 downturn and are keeping their graduate recruitment programmes open despite retrenching among higher-paid staff, according to the City's biggest training body.
The Securities & Investment Institute said that, after analysing exam entries from 20 top investment banks, "it is clear that graduate recruitment is running at 94 per cent of the 2007 level, which was itself a significant increase on 2006".
Simon Culhane, chief executive of SII, said: "This is encouraging news as it demonstrates that banks are looking to the longer term and confirms the importance that they place on seeking highly skilled new recruits."
While there is little difference in the recruitment levels between US and non-US banks (down 4 per cent and 8 per cent respectively) there is a surprising modest rise in the graduate intake among banks based in the City of London, offset by a corresponding fall elsewhere.
An SII source said: "Last time they axed jobs across the board. This time banks are looking to the future."
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