Cue a full-scale retreat: hundreds, if not thousands, of job cuts are in the pipeline and the bank’s earnings targets have been kicked into the long grass.
Admittedly, the bank has to contend with added extras: a 19 per cent capital requirement from Swiss regulator Finma – although this seems up for some negotiation – and a flight into the “safe haven” of the Swiss franc that has artificially depressed its revenues, much of which are earned in other currencies.
But in its drive to grab market share off rivals, UBS was far too hasty in ramping up its headcount, particularly in the badly hit area of fixed income. The figures show that UBS increased its payroll from 64,617 to 65,707 over the last year, having only just shed thousands post-crisis.
Personnel costs fell as it paid out lower bonuses, but not as much as revenues. Reversing this over-enthusiasm will entail “significant restructuring charges”, says chief executive Oswald Grübel (pictured).
It will also be disruptive to the investment bank’s culture and client relationships. In a turbulent climate, investors and clients are looking for a steady hand. A wild surge of hiring and firing is hardly going to help matters.