Zurich, Switzerland (GenevaLunch) – UBS, Switzerland’s largest bank, has announced a fourth quarter loss of CHF8 billion, higher than most analysts’ forecasts, bringing the bank’s loss for 2008 to CHF19.7b, due primarily to losses on risk positions in investment banking.

It reduced variable compensation bonuses, a contentious public issue in recent weeks, to 80% for the group as a whole and  95% for the investment bank, for 2008. It also announced that another 2,000 jobs in investment banking are likely to go by mid-2009 bringing the bank’s total employment down to around 75,000 people. The bank reduced its staff by 1,782 in the fourth quarter, and cut its staffing costs for 2008 by 36%  compared to 2007.

The bank has announced structural changes but says it is determined to keep its US wealth management business despite speculation it might sell it, and it remains committed to investment banking, at the centre of its problems, but where it has been reducing its risk exposure.

The fourth quarter results showed the impact of falling markets but also of net new money outflows, with clients in wealth management and business banking taking out CHF58.1 b and investment banking clients taking out CHF27.6 b. Le Temps notes that the total net outflow for the year, some CHF230b, is equal to the total amount managed by Geneva’s leading private wealth management bank, Pictet.

A new Swiss market head will be named to strengthen wealth and business management in Switzerland as part of the restructuring at the bank, and the wealth management division will have a stronger board presence.

Marcel Rohner, UBS chief executive, pointed out that there is some good news despite the dismal report: net new wealth outflows began to turn around during the fourth quarter and were positive for both wealth management and asset management by January 2009. It is transferring fewer toxic assets, than earlier expected, to the new SNB StabFund set up with the Swiss National Bank, so that the cap on the bailout fund is now $39.1 rather than $60b.
UBS press release on Q4, 2008 results

Related stories:

• in English: Bloomberg (UBS asset management reorganization), Financial Times (overview), Reuters (UBS job cuts)
• in French: Le Temps

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