Swiss bank UBS said on Tuesday it plans major job cuts to reduce costs of up to $2.5bn over the next two to three years. The announcement came as it reported a 49 percent 2Q11 decrease in net profit to CHF1.01bn from CHF2bn during the same period in 2010.
Group revenues were down 14 percent for the quarter to CHF7.2bn due to lower client activity, while the drop in quarterly profit was blamed on the high value of the Swiss currency and weaker trading, according to a bank statement.
The company said: “New capital and regulatory requirements, combined with a weakening economic outlook, are likely to weigh on future returns, constraining growth prospects for the industry. While we believe we will deliver higher profitability, our target for pre-tax profit set in 2009 is unlikely to be achieved in the original timeframe of three to five years. Over the next two to three years, UBS will eliminate costs of CHF1.5bn to CHF2bn, while remaining committed to investing in growth areas.”
Group CEO, Oswald Grübel, said: “We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency. While our target for pre-tax profit set in 2009 is unlikely to be achieved in the original timeframe, our strong competitive positioning and our capital strength give us confidence for the future.”
Meanwhile, Deutsche Bank's 2Q11 net profits failed to reach market expectations as it rose only six percent year-on-year to €1.23bn.
The bank also warned that it may miss its target of generating €6.4bn from its investment banking division due to the European debt crisis, according to a statement.
In other news Deutsche Bank named Anshu Jain, the head of its investment division, and European business head, Juergen Fitschen, as co-chief executives with immediate effect.
Bank of Ireland, which has been struggling to ward off government control through capital restructuring and rights issues, has received a boost from a group of Canadian and US investors who have agreed to buy up to €1.12bn worth of its shares.
The deal comes as the lender was preparing for a €1.9bn rights issue completion that would have seen the government gain control of the bank by increasing its 36 percent stake to around 70 percent.
The investment is widely perceived to be a significant vote of confidence for both the Bank of Ireland and the Irish economy.