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UBS (SIX:UBSN) proved this morning that the banking crisis is not over, announcing that it would be cutting another 10,000 jobs worldwide by 2015. Apparently the cuts are starting immediately.
Although the company has denied the reports, it is alleged that some workers were unable to gain access to the bank with their electronic passes this morning. The bank said that employees passes were enabled, but that they were being called to the HR office where they were told they could gather their things and go home.
Despite what the banks says, it does appear that the doors were, indeed, inaccessable at the Finsbury Avenue branch. About 100 fixed income traders will be put on paid leave today until the bank determines their actual final remuneration packages.
Seventy-five percent of the cuts will take out place outside of the bank’s native Switzerland, reducing the workforce from 64,000 to 54,000, making the job loss the second largest since Lehman Brothers. UBS is restructuring to remove itself from the high-risk investment banking sector. About 6,000 people are employed by UBS in the UK. Nearly two-thirds of them are in investment banking. So this morning, about 3,900 employees are sitting on pins and needles, waiting for the news they know is coming.
The UBS Spin
UBS CEO Sergio Ermotti said, “This decision has been a difficult one, particularly in a business such as ours that is all about its people. We will no longer operate to any significant extent in businesses where risk-adjusted returns cannot meet their cost of capital. The net impact of all these changes will be transformational for the firm. Our overall earnings should be less volatile, more consistent and of higher quality” (my emphasis).
What a Fly on the Wall Heard in the Boardroom
“Mr. Chairman, we have a problem. We have a £2 billion one-off charge for restructuring expenses. We have a £574 million debt-related charge. We got screwed on the Facebook IPO to the tune of £227 million. Then there’s that dang-blasted bloke, Kweku Adoboli, who single-handedly lost £1.4 billion of our money. Our operating profit dropped by 40% in the first six months. During the 3rd quarter we lost £1.4 billion compared to a £674 million profit year-on-year. Sir, we don’t just have a problem, we’ve got a multi-billion pound problem. But all is not lost. We could save nearly £2.5 billion by cutting 10,000 jobs.” (Okay. You got me. They talked in Swiss francs. The fly translated.)
The View of 10,000 Soon to be Ex-Employees
“Wow! The guys at the top screw-up again, so I get fired for doing my job. This will be transformational! I can hardly wait to tell my wife and kids! It sure will be fun learning how to file for government assistance online. Plus, I’ll get to make new friends with all the other unemployed bankers at the local pub. And, you know what else I’m going to do? I’m going to root for anyone but Arsenal, because the bloke who fired me is the first three letters of the team’s name.
For the gurus at the top of UBS, the problem may be solved and the crisis is over. For the employees who will lose their jobs, the crisis is just beginning.
OMG, am off to shoot myself right now. Appalling, unforgivable. Abject apologies. Fixing now.