June 18 - UBS AG, Europe's biggest bank by assets,is cutting about 500 jobs at its investment bank worldwide asrevenue from equity sales and merger advice declines.
The Swiss bank is shedding about 3 percent of the employees atUBS Investment Bank, said David Walker, a UBS spokesman in London.The cuts include more than 15 percent of the 600 employees in theEuropean group that focuses on mergers, share sales and othercorporate advice, people familiar with the matter said.
Initial public offerings have fallen to a 24-year-low andmergers have declined by 70 percent since 2000, leading securitiesfirms to eliminate more than 100,000 jobs. John Costas, chiefexecutive of the London-based UBS Investment Bank, has cut fewerjobs than rivals such as Merrill Lynch & Co., which eliminated atleast 22,400 positions since the end of 2000.
"Corporate finance is still in trouble," said Jason Kennedy,a managing partner of Kennedy Associates, a London-based recruitingfirm for financial services companies. "There still will be morecuts" in the industry.
UBS is following competitors in reducing the ranks of bankersthis year. Morgan Stanley, the world's second-biggest securitiesfirm by capital, began eliminating as many as 100 investment bankingand analyst jobs around the world earlier this month to reducecosts. In April Merrill Lynch, the world's biggest securities firm,began firing about 150 bankers.
Review of Costs
"We regularly review our cost structure and our objective isto balance costs versus growth," UBS's Walker said.
The investment banking division in Europe will be reorganizedto enable junior bankers to work with senior bankers on any type oftransaction instead of assigning them to industry groups. The newstructure is similar to one adopted by Lehman Brothers Holdings Inc.in Europe last October.
Shares of Zurich-based UBS rose 30 centimes to 75.80 Swissfrancs at 1:55 p.m. The stock has advanced 13 percent this year.
The bank's global securities business reported a 6 percentslide in first-quarter pretax profit to 894 million francs ($683million) on falling fees from mergers and share sales.
Peter Wuffli, president of UBS AG, said in May that the longestbear market in more than five decades may be near an end.
UBS Investment Bank, previously known as UBS Warburg, has atotal of 16,000 employees in 30 countries, according to thecompany's Web site. The division's units include equities, fixed-income, rates and currencies, private equity and investment banking,which includes mergers and general corporate advice.
Foreign Exchange
It ranks eighth this year in European mergers, advising on 36transactions worth $21 billion, Bloomberg data show. UBS was sixthin the same period last year, with 53 transactions valued at $50billion. Globally the bank ranks 10th this year. In U.S. investment-grade bond underwriting UBS has fallen to 12th place from 10th forall of last year.
The firm is faring better in equities and currencies. It ranksfifth in global equity and equity-linked underwriting so far thisyear, up from seventh for the full year 2002. European fund managersrate UBS to be the best brokerage for equity research in surveys byboth Thomson Extel and Institutional Investor magazine.
UBS also unseated Citigroup Inc. this year as the top-rankedforeign-exchange bank, winning Euromoney magazine's annual market-share survey for the first time with an estimated 11.53 percent ofthe currency market, up from 10.96 percent last year. It was onlythe second time since 1979 that Citigroup hasn't ranked first.
Bankers Depart
The job reductions come after UBS in April cut 95 equities-related positions in New York and Switzerland, including 70 jobs atthe investment banking division in New York. The firm has trimmedLondon investment banking jobs in June for the last two years, partof an annual cost and performance review.
UBS has also lost people in Asia. Jim Clark, the head ofJapanese equity trading at UBS, is leaving after 15 years to pursuepersonal interests, said spokesman Matthew McGrath. Last month UBSsaid that its president of investment banking in Japan, Mark Chiba,was resigning to start a private investment fund.
Senior investment bankers are quitting the industry as demandfor their services slumps. Goldman Sachs Group Inc. co-presidentJohn Thornton and E. Scott Mead, the head of telecommunicationsbanking, have said they are leaving. Masayoshi Nakamura, MorganStanley's Tokyo head of mergers, Richard Gillingwater, Credit SuisseFirst Boston's head of U.K. investment banking and Citigroup Inc.'sco-head of mergers, Herald Ritch, are among the other recent seniordepartures.
UBS last year surpassed Deutsche Bank AG as Europe's biggestbank by assets.
