UBS goes nuclear in reorganization bid

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UBS has decided that it's future lies not in gradual transition but in a dramatic, all-at-once transformation that will once again reshape the bank for the future.

It's not often that a bank announces that it will cut 10,000 jobs over the next few years, on top of 3,500 job cuts last year, and the layoffs are already underway. The bank has pared back the number of traders it employs in Asia, for example. Other traders showed up for work in London, only to find that their security pass cards did not work.

The traders gathered at a local pub to commiserate, cheering as more locked-out employees showed up. The UBS traders who were kept out of the business "were either handed their belongings in plastic bags, or had to call colleagues inside the bank to bring down their possessions," notes Reuters. This shouldn't be all that surprising, as management does not want to risk an incident or the chance of intellectual property theft.

Some traders were told they were on paid leave until further notice. About two years ago, the bank had decided to transition out of investment banking, which had been ailing, to focus on wealth management. That hasn't changed. What has changed is the apparent desire to hasten the change process, hence the mass layoffs. At a time when other banks are feasting on FICC activity, UBS has decided it cannot compete. It will largely exit fixed income and focus strategically on  advisory services, research, equities, foreign exchange and precious metals.

One big issue here is the extent to which other Swiss and European banks will be forced to follow suit.

"I suspect that many banks have not yet really understood what the consequences of the new capital rules for business will be when they come into full effect in 2019," the chairman of the UBS was quoted by Bloomberg. "Swiss rules commit us to even higher own capital demands than the 10 percent capital quota that Basel III orders."

For more:
- here's a Bloomberg article
- here's the article

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