ZURICH, Oct 1 UBS AG, the world's largest wealth manager, unveiled $ 3.4 billion in losse

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ZURICH, Oct 1 (Reuters) UBS AG, the world's largest wealth manager, unveiled $3.4 billion in losses, swept out senior managers and slashed jobs in one of the biggest casualties yet worldwide from the credit crunch.

UBS said on Monday it would write down a net 4 billion Swiss francs ($3.42 billion) in losses in its fixed income portfolio and elsewhere, resulting in a third-quarter loss of 600-800 million Swiss francs, its first quarterly loss in nine years.

UBS said it would shed 1,500 jobs in its investment bank -- a sharp reversal of its recent build-up.

The news sent UBS shares lower, dragging other banking shares with it, as investors took cover from a credit crisis that has forced numerous rescue manoeuvres by central banks and obliterated profits at those exposed to risky investments, sub-prime mortgages and complicated products.

The loss underscores the depth of the crisis -- which has already seen central banks inject record amounts of liquidity into the markets to keep the financial system functioning -- and underscores uncertainties at rival banks, who may also be forced to unveil losses ahead of their scheduled results announcements.

''The critical time will be over in the next six months,'' Chief Executive Marcel Rohner said in a conference call with journalists.

In a separate announcement, rival bank Credit Suisse said it was also hit by the credit crunch but that it would remain profitable in the third quarter with income from continuing operations after tax of around 1.3 billion francs. The bank declined to provide further detail. For a story, double click on ''It's probably safe to say, UBS won't be the last bank to announce something like this in the months ahead, but it begs the question as to how long this turmoil will continue,'' Eamonn Hughes of Goodbody Stockbrokers.

UBS shares were down 1.9 percent at 0737 GMT, making it one of the biggest losers in the Dow Jones index of European banks, which was down 1 percent. Credit Suisse was down 1.16 percent.

HEADS ROLL CEO Rohner swept out much of the management team he inherited in July, saying it was necessary to accelerate a transformation in the investment bank. He downplayed speculation UBS would seek to split the group into its two, main units: investment banking and wealth management.

As part of the sweep, investment bank head Huw Jenkins, who drove a rapid expansion in UBS's bid to join the top five investment banking ranks worldwide, will leave along with Group Chief Financial Officer Clive Standish.

Rohner -- who was named chief executive in July after the shock exit of CEO Peter Wuffli due to hedge fund losses -- will assume control of the investment bank and risk-management expert Marco Suter will become chief financial officer.

STRATEGY QUESTIONS The losses would appear to exceed those reported so far by other investment banks.

The fallout of the subprime crisis has varied in the United States, with Goldman Sachs Group Inc reporting a near-80 percent jump in quarterly profit last month, and rival Bear Stearns Cos posting a 61 percent drop.

The potential losses come at a time when critics are questioning UBS's dual strategy of investment banking and wealth management.

Wuffli was replaced after the bank said it was dissatisfied with his handling of the bank's in-house hedge fund, Dillon Read Capital Management.

Wuffli had led the bank on a steep growth path, expanding from its traditional base in private banking and rapidly building up its business in the United States.

Investors are increasingly concerned more banks might announce losses related to credit problems as they closed their books on a tumultuous third quarter. Persistent worries about the health of the banking system have weighed on financial markets around the world.

A meltdown in the U.S. subprime mortgage market, sparked by growing defaults on riskier loans, has created a squeeze in credit markets around the world.

Despite signs in recent weeks that the credit tightness may be easing, some banks continue to report they are struggling to find cash on wholesale lending markets.

REUTERS SR RN1537

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