Swiss bank UBS AG, which suffered massive client withdrawals after a high-profile U.S. tax fraud probe, has cut around 200 jobs at its U.S. wealth management arm, sources familiar with the matter told Reuters.
The layoffs, which one source said come on top of the 8,700 job cuts already announced and involve junior and new advisors, signal an effort by UBS
It's probably a combination of factors, said David Williams, an analyst with Fox-Pitt, Kelton.
I would not be surprised if there had been a business downturn since the Internal Revenue Service litigation and there is maybe an element of performance review.
Swiss rival Credit Suisse
The U.S. layoffs mark a change from UBS' aggressive hiring of new wealth managers toward the end of 2008.
New hires helped the U.S. wealth management arm to attract 16 billion Swiss francs ($15.66 billion) of new client money in the first quarter of 2009. But it has suffered outflows since.
The job cuts represent 2.5 percent of the 7,939 financial advisers UBS had in the United States at the end of June.
A source familiar with the situation said the layoffs were new employees who had completed the training program or were new advisers in the field.
It looks as if the job cuts involve mainly junior staff with small portfolios, said Vontobel analyst Andreas Venditti.
A second source familiar with the situation confirmed the layoffs. UBS was not immediately able to comment.
Even though UBS' name has suffered during the tax dispute, the Swiss bank was able to put a major headache behind it when it settled the issue in August.
But its main rivals in the U.S. wealth management space, including Merrill Lynch and Citi
The advantage for UBS is that right now, there is no big U.S. financial institution with positive brand association, said Williams. But they will have to go a long way to make sure there is no lasting damage from the U.S. tax litigation.
In April, the world's second largest wealth manager by client assets cut 2,000 U.S. jobs as part of a restructuring plan to cut 8,700 jobs worldwide.
UBS Wealth Management Americas saw net new money outflows of 5.8 billion Swiss francs ($5.5 billion) in the second quarter.
Besides the tax dispute, UBS has been hurt by executive departures, bad bets on auction rate securities and write-downs.
UBS increased its presence in the United States in 2000 with the $10 billion acquisition of PaineWebber Group, a brokerage firm with over 8,500 brokers and $500 billion in client assets.
(Editing by David Holmes and David Cowell)
($1=1.022 Swiss Franc)