European Bank Job Cuts Exceed 40,000 as UBS Eliminates 5% of Its Workforce..........24 AUG 2011 2011

European Bank Job Cuts Exceed 40,000 as UBS Eliminates 5% of Its Workforce

UBS AG (UBSN)’s decision to cut 5 percent of its workforce brings to more than 40,000 the number of jobs cut by European banks in the past month as the region’s worsening sovereign debt crisis crimps trading revenue.

UBS, Switzerland’s biggest bank, said yesterday it will eliminate 3,500 jobs, mainly from its investment bank. It follows HSBC Holdings Plc (HSBA), which announced 30,000 cuts on Aug. 1, Barclays Plc (BARC), which is cutting headcount by 3,000, and Royal Bank of Scotland Group Plc (RBS), which is eliminating 2,000 posts. Credit Suisse Group AG (CSGN) announced 2,000 reductions on July 28.

the creditworthiness of Italy, Spain and France roil financial markets and reduce income from fixed- income trading, stock and bond underwriting as well as mergers and acquisitions. Financial firms are also cutting costs as regulators force banks to hold more and better quality capital to withstand future shocks.

“It’s a bloodbath, and I expect things to get worse before they get better,” said Jonathan Evans, chairman of executive- search firm Sammons Associates in London. “I cannot see a lot of those who have lost their jobs getting re-employed. Regardless of how good someone is, no one wants to talk about hiring. Life will be very difficult for two or three years.”

Credit Suisse and UBS both reported a 71 percent drop in investment-banking earnings in the second quarter. Revenue at Edinburgh-based RBS’s securities unit dropped 35 percent in the period, while London-based Barclays Capital posted a 27 percent decline in pretax profit.

“Some job cuts will be done by all banks” with investment banking units, said Stefano Girola, a fund manager at Albertini Syz & Co. in Milan, who helps manage about 3 billion euros ($4.3 billion). “Business volumes are poor, especially in equity and corporate bonds divisions.”

The Basel Committee on Banking Supervision will require lenders to more than triple the core reserves they must hold to protect themselves from insolvency by 2019. Under Basel III, banks will be obliged to hold core Tier 1 capital equivalent to 7 percent of their risk-weighted assets, compared with 2 percent under the previous international rules.

“The banking industry overall is clearly re-shaping its cost base,” said Andrew Gray, banking leader at accounting firm PricewaterhouseCoopers LLP in London. “We may well see some further losses of jobs over the course of the second half of 2011. Exactly where is impossible to say, but we will see some further cuts from other institutions.”