UBS AG said it plans to cut about 5,500 jobs or 7% of its workforce, as it tries to grapple with $19 billion in losses related to the U.S. real estate and structured credit markets.
A UBS spokesperson confirmed that the bank would cut about 2,600 people from its investment bank unit, although the layoffs were not broken down by product line.
The company delivered the news on Tuesday as it reported its first quarter operating results. The bank's performance was disappointing across several business areas, including wealth management, mergers and acquisitions and falling securities prices.
Further, media reports have it that BlackRock will buy a $15 billion subprime mortgage portfolio from the investment bank at a 25% discount to its face value. The plan involves creating a new fund that will invest in the mortgages, and then market the fund to investors.
UBS would not comment about the BlackRock subprime mortgage purchase.
As for its poor showing in the first quarter, UBS also reported a net loss of CHF 11.5 million ($11 million), down from a net profit of CHF 3,031 in the same period last year.
UBS expects financial industry conditions to remain difficult with a continuing unfavorable global economic climate, deleveraging by institutional and private investors, slower wealth creation and lower trading and capital markets activity, according to a company statement.