UBS Down As Worries of Profit More Cuts seen, analyst

30 March 2009 @ 06:48 pm EDT

Switzerland's UBS, the world's largest wealth manager, had written down more than $49 billion since mid-2007, and it expects more write downs and job cuts in the first quarter.

Last Sunday, the Swiss newspaper Sonntag reported that UBS would write down at least another $2 billion and cut 8,000 jobs on Wednesday.

Senior Celent analyst Nicolas Michellod said "I Think It’s relatively normal that we will see job cuts based on the fact that UBS has a huge machine and needs to implement a cost-cutting program if they want to be efficient for the future."

"We expect a first-quarter 2009 profit warning from UBS as it writes down some about $5 billion of assets and makes a restructuring charge for letting go some 5,000 to 10,000 people," and rates UBS at $16.70 target, Helvea analyst Peter Thorne said.

According to the reports, the bank managed to reverse its massive outflows seen in 2008, but warned profit would come as a major disappointment to some shareholders after a streak of quarterly losses.

The possible warning comes amid upbeat statements from Deutsche Bank AG (DB) and Credit Suisse Group (CS) last week. Both cross-town rival Credit Suisse and the German bank told investors that they had seen a strong start to 2009, while exercising caution on full-year forecasts.

In Addition, Morgan Stanley analyst Huw van Steenis wrote in a note to the clients,

"We think UBS in its investment bank will struggle to break even under monoline credit value adjustments."

Shares in UBS fell 96 cent to 9.83% at $8.81 in the early trading.