UBS AG's Wealth Management Americas brokerage has space issues: too much real estate for a work force reduced by thousands in the past two years.

On Tuesday the Swiss bank said its ranks of Americas financial advisers fell another 3 percent during the quarter, to 6,867. On a net basis nearly 1,900 brokers, or more than one in five, left UBS during the past year.

Total jobs fell by more than 3,900, or 19 percent.

In short, the brokerage once known as Paine Webber is sitting on a lot of empty desks.

This organization has the infrastructure of one managed for scale, like it has 10,000 brokers, Wealth Management chief Robert McCann told brokers in a town hall meeting on Tuesday, according to a person who attended the late-afternoon session.

McCann, a Merrill Lynch veteran brought on last October to revive UBS' struggling brokerage, noted the unit's home office in Weehawken, New Jersey, has 2,000 fewer employees than a year ago and some floors that are nearly empty.

UBS also has some back office employees on Manhattan's Park Avenue. They will be moved to cheaper digs in Weehawken.

Cutbacks also will extend to the field, including a Beverly Hills building where UBS leases two floors yet only one is occupied.

That said, McCann told his brokers that cutting back is not the only strategy.

We're not going to shrink our way to greatness, he told the brokers, the person attending told Reuters.

In particular, McCann criticized the bank's decision last year to sell 56 branches, 495 productive brokers and $16 billion in assets to Stifel Financial . The sale, which generated $29 million of upfront cash, was penny wise, pound foolish, he said.

McCann last month announced that he wants UBS to grow and thrive by concentrating on urban areas and wealthy clients, with a force of roughly 7,000 advisers.

On Tuesday, though, he that stressed UBS will not close or sell successful branches.

McCann, the person said, also reported some early successes in recruiting. UBS group chief Oswald Gruebel last year shut down a very expensive poaching campaign, which meant departures were not offset by new additions.


Cutbacks and a lack of recruiting were visible in the first quarter, when client assets continued to leave the bank. Still, UBS said outflows related to adviser departures decreased, while overall U.S. withdrawals narrowed to 6.4 billion Swiss francs from 11.3 billion in the fourth quarter.

Still, the declines in personnel and assets from pre-crisis highs have forced UBS to cut back on overhead.

Restructuring also led to a 21 million franc charge. The bank expects to record another 150 million francs of charges during the second quarter, primarily from closing and consolidating offices.

These charges, and surging personnel costs, nearly wiped out pretax profit for the quarter.

UBS paid the first installment of a retention package introduced late last year. The Growth Plus program rewards advisers who have been at the firm for at least five years and produce $500,000 annually.

On a positive note, client assets climbed 4 percent from the fourth quarter, and 8 percent from the year-earlier period, to 768 billion francs, mainly a reflection of rising markets.

The Wealth Management Americas numbers are not impressive, but Bob McCann arrived only four or five months ago, so it's a bit too soon to judge him, said Matthew Clark, a London-based banks analyst for Keefe Bruyette & Woods.

UBS said net inflows among brokers with UBS for more than one year -- akin to same-store sales for retailers -- were positive for the first time since early 2008.

UBS also notes its advisers each managed $99 million in assets on average, the current industry high. Average revenue per adviser, however, fell 3 percent to $736,000 from the fourth quarter.

UBS trails market leader Merrill Lynch, whose advisers average $807,000 of revenue, but surpassed Morgan Stanley Smith Barney , which averaged $685,000. [nLDE6421E5]

The Americas unit has suffered 27 billion francs of outflows during the past four quarters, paced by net departures of 1,400 brokers since the end of 2007.

Advisers and clients were spooked by $52 billion of credit losses as well as accusations from U.S. authorities that UBS Swiss bankers helped some U.S. customers avoid taxes.

(Reporting by Joseph A. Giannone; Additional reporting by Helen Kearney; Editing by Derek Caney, John Wallace, Tim Dobbyn and Richard Chang)