Updated 22:00 with links on reactions  Zurich, Switzerland (GenevaLunch) – UBS shareholders meet today, 15 April, to approve the new governing board of the bank at the annual general meeting (AGM). Before the doors opened the bank had made a pre-announcement that first quarter 2009 losses amount to nearly CHF2 billion and that it will cut 8,700 jobs, for a global workforce that will be reduced to 67,500 in 2010. Nearly one-third of the bank’s employees are in Switzerland and 2,500 of the job cuts will be in Switzerland, with 1,200-1,500 of them through layoffs. UBS says it expects to cut costs by CHF3.5 to 4 billion by the end of 2010, compared to 2008 costs.

The bank says that it suffered a net outflow of new money of CHF23 billion during Q1 2009 at its Wealth Management and Swiss Bank, mainly after the announcement that it had reached a settlement with the United States Treasury Department. Wealth Management Americas, however, has had a positive net inflow of CHF16 billion.

Oswald Gruebel, who became the bank’s CEO in February 2009, says the bank will focus on getting out of high-risk business and unpromising businesses and concentrate on what the bank says is its core business – international wealth management and the Swiss banking business, providing global expertise in investment banking and asset management. UBS will continue to reduce risks. “We know where we have to set to work. It will be a long road back to success without any quick fixes. Rather, we will move forward step by step in a rigorous and disciplined manner.”

Kaspar Villiger, slated to be the new chairman of the board, made his position on the contentious question of tax evasion and the role of banks clear, in his speech, released before the meeting: “But it is equally legitimate for other countries to seek to combat tax evasion. If the Federal Council wants to expand the duty to provide information in specific cases with concrete grounds for suspicion, we should not criticize this. However, the automatic exchange of information would be a step toward “transparent citizens.” It signals the mistrust of the state toward its own citizens. Mistrust does not foster loyalty to one’s country. It puts a strain on it. At the same time the automatic exchange of information is also not efficient. There is a critical technical weakness associated with it. Because it only functions based on the so-called paying agent principle, tax-evading investors can avoid the automatic exchange of information easily. They only have to move their paying agency outside of the system. The tax authorities in their homeland come up empty handed, and the region with the automatic
exchange of information loses capital. As a citizen, I am against such a system.

“Only the combination of information exchange in individual cases, when it is requested because of a valid suspicion of income tax evasion or fraud, along with a carefully designed withholding tax for earnings on assets will help us efficiently achieve both goals: securing tax revenues for the country of residence and avoiding the transparent citizen. In my estimation, the automatic exchange of information will result in neither the source state nor the state of residence receiving the tax revenue it expects.”

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