risky..dow jones, page-11

Oh dear UBS - wonder why those wealth management outflows are continuing - shaky financial foundations or poor advice and analysis?

lol

* APRIL 15, 2009, 8:02 A.M. ET

3rd UPDATE: UBS Expects Near-CHF2B 1Q Loss; To Cut 11% Staff

*Expected 1Q Net Loss Wider Than Analyst Forecasts
*Hit By CHF3.9 billion In Write-Downs In 1Q
*Big Wealth-Management Outflows Continue
*Says Tier 1 Ratio Falls To Near 10% from 11.5%.

By Katharina Bart
Of DOW JONES NEWSWIRES

ZURICH (Dow Jones)--UBS AG (UBS), hit by the effects of the global economic crisis and a crackdown by U.S. tax authorities, Wednesday said it expects to report a first-quarter net loss of nearly 2 billion Swiss francs ($1.75 billion) and that it will slash over 11% of its workforce to cut costs.

Chief Executive Oswald Gruebel said UBS' outlook remains cautious because of the many uncertainties that the Zurich-based bank faces.

UBS said it had roughly CHF3.9 billion in write-downs in the first quarter related to illiquid securities, expenses for credit losses, and the lower value of assets on the remaining positions transferred to the Swiss National Bank as part of a government shore-up.

Both the quarterly net loss and write-downs were wider than analysts had expected. Full earnings are scheduled May 5. UBS reported a net loss of CHF20.89 billion for the full year of 2008.

Under Gruebel, who was installed as CEO six weeks ago, UBS aims for cost savings of CHF3.5 billion to CHF4 billion by the end of 2010 over costs in 2008, when the bank spent CHF28.56 billion, translating to cuts of up to 14%.

A large chunk of this will be achieved through 8,700 job cuts, with UBS expecting to reduce overall staff to 67,500 from 76,200 at the end of March. Home market Switzerland accounts for 2,500 of the jobs to go, with up to 1,500 formal layoffs "unavoidable," the bank said.

UBS has cut roughly 11,170 jobs since it began writing down mortgage-related securities, not including the 8,700 announced Wednesday.

UBS said its Tier 1 ratio - a measure of capital strength - will dip to roughly 10% at the end of March, which is seen by analysts as the lower end of what UBS needs, from 11.5% at year-end.

"This raises the question of whether more capital will be needed," Credit Sights analyst Simon Adamson wrote.

Gruebel seemed to acknowledge the thin capital, saying UBS will do whatever is necessary to "immediately protect and strengthen our capital base."

"Markets remain extremely unstable, and we will not simply wait and hope for better times," Gruebel told shareholders, whom he addressed for the first time Wednesday.

At 1246 GMT, the UBS shares were down CHF0.57, or 4.3%, to CHF12.70. The Stoxx Europe 600 bank index was down 1.6%.

Analysts expressed frustration over the lack of detail provided by UBS over the write-downs, which presumably stem partly from troubled monoline insurers in the U.S., or to what extent cost cuts will hurt revenue.

"With the limited information available, we find it difficult to come to a conclusion on the underlying profitability of UBS - the key issue for us at this point," said JP Morgan analyst Kian Abouhossein, who rates UBS at overweight.

UBS said it saw withdrawals by wealthy private clients, mainly after the bank in February agreed to pay $780 million and hand over client data to the U.S. to settle a tax evasion probe.

Net outflows at the private banking division - called wealth management and Swiss bank - tallied CHF23 billion for the quarter.

"The continued outflows in wealth management and Swiss bank were disappointing and will be a major focus of attention for the new CEO," said Peter Thorne, London-based analyst with independent brokerage Helvea. He rates UBS at accumulate with a CHF16.70 target.

Gruebel also said UBS will stick with the so-called integrated model, meaning it will keep its investment bank and asset management units, alongside its private bank, which it considers core.

However, the loss-making investment bank will continue to be cut back, with UBS exiting some, undisclosed locations. UBS will focus on strong positions it holds in areas such as equities and foreign exchange, while trading will be focused on business for clients.

UBS said the layoffs aim primarily at so-called back-office and middle-office areas such as IT, though employees with client contact also won't be spared.

Other than staff cuts, UBS wants to spend less by scaling back marketing, sponsorship and consultants. The bank also plans to cancel once-generous employee perks such as subsidiaries for car leasing or parking spaces, according to a Swiss banking employee lobby.

At the Wednesday meeting, shareholders are set to vote Kaspar Villiger the bank's chairman, replacing Peter Kurer after just one year.