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UBS expected to cut up to 10,000 jobsAlessandro Della Bella/The Associated Press

No one likes layoffs, but the new cuts at UBS just couldn't be avoided.

On Tuesday, the investment bank formally announced that it would lay off 10,000 staff. By 2015, its global head count is expected to be 54,000, down from 64,000 today.

The message is clear: UBS is de-risking. Management is slashing its exposure to speculative assets, so much so that the investment bank's risk-weighted assets are expected to fall to CHF 70-billion in five years, shedding a whopping CHF 90-billion over that time period.

There's a very clear explanation for all of this. Look back a decade, and the investment bank has posted a combined pre-tax loss of roughly CHF 37-billion, largely because of the blow dealt in 2007 and 2008. (This handy chart from William Wright details the annual differences.) It's quite simple: the profits during the boom years just weren't high enough to offset the shocking losses experienced during the worst of the crisis.

And in the years since, UBS has remained on shaky ground. Last year the bank lost £1.4-billion in one fell swoop all because of a rogue trader. Now UBS is saying it will get back to its "traditional strengths" in advisory, research, equities, FX and precious metals.

According to Reuters, the sovereign, supranational and agency (SSA) bond business is being drastically cut, as is the commercial paper desk. There is also chatter of cuts to Gilts sales and trading teams.

The new plan to de-risk will take three years to play out, during which UBS will incur restructuring charges of CHF 3.3-billion. Total cost savings from the cuts are expected to amount to CHF 5.4-billion, over CHF 3-billion higher than those from the cost cutting plan announced just over a year ago.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 7:00pm EDT.

SymbolName% changeLast
UBS-N
UBS Group Ag ADR
-1.19%31.55

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