Swiss bank UBS said it would slash costs and admitted it would miss targets set in 2009 after reporting disappointing second quarter profits hurt by sluggish markets and a strong franc.
The bank said it would cut costs by 1.5bn - 2bn Swiss francs (£890m - £1.2bn) in the next two to three years and said it would likely book "significant restructuring charges" later this year.
"We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency," Chief Executive Oswald Gruebel said in a statement.
"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."
Gruebel, brought out of retirement in 2009 to turn UBS around after it almost collapsed in the financial crisis, had targeted a pre-tax profit of 15 billion francs from 2012, but many analysts had already said UBS was unlikely to meet it.
UBS said it did not expect material improvements in market conditions in the third quarter, particularly given a traditional decline in activity due to the summer holidays, and said these would continue to constrain its results.
It also said it might recognise deferred tax assets that could reduce its full-year effective tax rate although a British levy on bank liabilities introduced just after the end of the second quarter could hit the investment bank's performance before tax by about 100 million francs before the end of 2011.
Net profit fell to 1bn Swiss francs, undershooting analysts' estimates for 1.23bn, hit by lower trading in the investment bank's fixed income, currencies and commodities business as well as the strong franc.
City A.M. Reporter