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.