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MW: UBS cutting 2,000 more jobs
 
Investment banking business to be scaled back

LONDON (MarketWatch) -- Switzerland's UBS said Friday that it will slash a further 2,000 jobs at its investment banking arm as it cuts costs and scales back its fixed income and commodities operations.
The planned cuts are equivalent to more than 10% of the investment bank's workforce and will bring total job losses at the division to around 6,000 since the third quarter of 2007. Most of the losses are expected to occur in the U.S. and U.K.

UBS , which has taken write-downs and other charges of more than $40 billion during the credit crisis, said the biggest changes will come in its fixed income, currencies and commodities division, which has been responsible for the bulk of the losses.
It plans to close most of its commodities business, with the exception of precious metals, and will also substantially cut back its real estate arm and proprietary trading operations -- where the bank makes bets with its own money.
UBS said it will continue to build its equities business, while keeping a tight control on costs, and will also continue to provide clients with strategic advice and access to capital markets.
"'The ongoing crisis in the financial markets and dramatically changed industry dynamics require us to recalibrate our business," said Jerker Johansson, CEO of the investment banking unit.
"While the revenue outlook is uncertain, these measures will allow us to focus on our strengths, reduce the cost base to a more sustainable level and position our core businesses for growth once fundamentals improve," he added.
Further job cuts at the bank had been expected after it said in the summer that it would restructure.
Oppenheim Research analyst Javier Lodeiro said the cutbacks in the fixed income and commodities arm should help the bank cut a further 200 billion Swiss francs ($177 billion) from its balance sheet and could also allow it to reduce its spending targets.
Shares in UBS climbed 6.3% in afternoon trading amid strong gains for the European banking sector. Also see Europe Markets.
Friday's gains came on top of a roughly 8% rise in the stock on Thursday after the bank announced it will likely make a small profit in the third quarter after reporting four successive quarterly losses. See full story.
The bank has substantially reduced its exposure to risky debt, but some investors have called for it to go further and spin off the investment banking arm amid fears that losses could frighten away its rich private banking customers.
UBS has repeatedly distanced itself from any sale of the division, arguing it is vital to provide a full range of services to those rich clients.
However, the bank has restructured its business to make each division more independent and ensure the investment bank can no longer borrow cheaply from other units -- which helped drive the rapid growth in its mortgage investments.
Lodeiro at Oppenheim Research said he believes Friday's announcement means the investment bank won't be sold in the next two to three years.
Source