UBS sinking under recession pressure

Losses at UBS in the first quarter of this year reached nearly Swfr2 billion (£1.2 billion), according to figures from the Swiss bank out today.

As the financial crisis continued to wreak havoc, the Zurich-based firm said losses for January to March hit Swfr1.98billion compared with losses of Swfr11.62 billion in the same period last year.

Chief executive Oswald Grübel, who was appointed in February having turned around rival Credit Suisse, said restoring profitability was the "most urgent" task for the bank.

UBS has lost about SwFr60 billion since the start of the credit crunch and Grübel has announced nearly 10,000 job cuts. Last week he named Alexander Wilmot-Sitwell and Carsten Kengeter as co-heads of the investment bank, replacing Jerker Johansson who lasted only one year in the job.

The investment bank made losses of SwFr3.16 billion in the first quarter after a string of writedowns as it continued to pull out of risky positions.

The wealth management division was hit by the clampdown on tax evasion by the US government which saw clients withdraw SwFr23.4 billion of funds in the three-month period. UBS has been asked to give up details of hundreds of American clients.

Grübel said: "There has been an improvement in market sentiment during the first quarter, with a strong rebound in global stock market indices since early March, but the credit markets improved only partly and trading in complex financial products remains illiquid.

"The markets continue to be unsettled, and we remain cautious on the immediate outlook for UBS.

"The real economy has continued to deteriorate, and this is expected to have negative implications for credit-related provisioning in coming quarters."

Raoul Paglia, fund manager at BSI, said: "It's not only a question of bringing the company back into the black, it's a question of credibility. They have an image problem. They have to try to restore it."