UBS to cut 3,500 jobs

UBS will cut about 3,500 jobs as it tries to reduce its annual costs by 2 billion Swiss francs

• Most of the cuts will come from the investment bank business, wealth management and the Swiss bank unit
• It expects to book charges of about CHF550 million as part of the cost reduction plans

ZURICH -- UBS AG UBS -0.58% Tuesday said it will cut around 3,500 jobs as it tries to reduce annual costs by 2 billion Swiss francs ($2.5 billion) in the face weaker earnings, increased regulation and slowing economic growth.

The Swiss banking giant said it expects to incur restructuring charges of around CHF550 million as part of the cost reduction plans, with CHF450 million to be booked mostly in the third quarter of 2011, according to a statement Tuesday.

UBS last month reported second-quarter net profit fell by half and said the increased capital requirements and the stricter regulatory environment in Switzerland, in addition to a worsening economic outlook, mean it is unlikely to meet the three- to five-year profit targets it set in 2009.

UBS's investment bank business will bear the brunt of the job cuts, accounting for 45% of the 3,500 positions to be lost, while the wealth management and Swiss bank unit will account for 35%, it said.

""A surprisingly high proportion of the cuts will be at the wealth management and Swiss banks business, but otherwise there are no big surprises," says Rainer Skierka, an analyst at Bank Sarasin.

Swiss banks are also struggling under the weight of the strong franc, which soared to record highs against the euro and the dollar in recent weeks, prompting the Swiss National Bank to cut interest rates to close to zero, and flood the money market with liquidity to damp investor demand for the currency.

Credit Suisse Group last month said it planned to trim 4% of its workforce to slash spending after disappointing second-quarter results.