Updated from 1:31 a.m. EST
Swiss banking giant
reported a fourth-quarter loss of 8.1 billion Swiss francs ($6.9 billion) and a 2008 loss of 19.7 billion Swiss francs ($16.8 billion) primarily because of losses on risk positions in its investment bank, and said its investment bank will further slash its headcount to 15,000 by the end of the year.
In the fourth-quarter a year earlier the bank reported a loss of 5.25 billion Swiss francs; in 2007 profit was 296 million Swiss francs.
Analysts had predicted a net loss in the latest fourth quarter of predicted net losses of 6.2 billion francs.
UBS said its investment bank recorded a pretax loss of 7.5 billion Swiss francs in the quarter, compared with a pretax loss of 2.75 billion a year earlier. The bank attributed the fourth-quarter loss to "trading losses, losses on exposures to monolines and impairment charges taken against leveraged finance commitments." A charge of 1.62 billion was recorded by the investment bank in the latest quarter.
UBS said its investment bank will remain a core business. The business has been "significantly de-risked and deleveraged, and its overall structure has been greatly simplified. Further targets have been set for 2009 for reducing its use of balance sheet and overall risk," UBS said.
UBS said net new money was positive in January in both its wealth management and asset management businesses.
"However, financial market conditions remain fragile as company and household cash flows continue to deteriorate," UBS said in a press release Tuesday. "On the other hand, governments are taking very substantial measures to ease fiscal and monetary conditions. Our near-term outlook remains cautious, and UBS will continue its program to strengthen its financial position through reductions in risk positions, risk weighted assets, total assets and operating costs."
UBS said it plans to refocus on its core activity in Switzerland, its international wealth management franchise, and its global onshore business. To this end it will create two new business units. Wealth management and Swiss bank will be led by Franco Morra and Juerg Zeltner, while wealth management Americas will be led by Marten Hoekstra.
UBS is shedding 2,000 jobs at its loss-making investment banking unit, which has been blamed for many of the bad investment choices that have seen the bank write down tens of billions of francs since mid-2007.
The Zurich-based bank said net new money outflows from its wealth and asset management businesses reached 85.8 billion francs during the fourth quarter .
UBS also revealed it will pay staff bonuses of 2.2 billion francs for the year. Further payments of 1.6 billion francs will be delayed until 2010. The bank has been embroiled in a fierce public debate over bonus payments since taking up a $60 billion bailout offer from the Swiss government last year.
UBS announced in November that its CEO, chairman and the executive board will receive no bonus payments for 2008. Since then several former top officials also have declined or handed back million-dollar payments.
The bank said it remains the subject of several investigations, including a tax evasion probe in the United States. The Internal Revenue Service has requested that UBS hand over details on U.S. clients suspected of having avoided paying taxes by hiding money in offshore accounts with the bank's knowledge.
UBS warned investors that other countries might follow the lead of U.S. authorities and investigate the bank's cross-border wealth management business.
"It is premature to speculate as to the scope or effect of any such reviews," UBS said.
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