Bloomberg reports that the net loss amounted to $2.08bn, compared with a profit of $354.8m a year earlier, UBS said in a statement Tuesday.
Chief Executive Officer Sergio Ermotti is cutting 10,000 jobs over three years and exiting most debt-trading businesses to focus the bank on money management and boost return on equity, a measure of profitability, to at least 15% in 2015. Chairman Axel Weber said in an interview last month that while market trends have improved, he expects a 'bumpy' recovery this year.
'Patience is required for UBS to deliver', Morgan Stanley analysts Huw van Steenis and Hubert Lam said in a note to investors before Tuesday’s release, adding that stronger markets would help speed up deleveraging at UBS. Successfully exiting fixed income should 'reveal higher returns in the core business', while execution risks 'will be critical', they said.
UBS’s bonus pool, including pay that is being deferred into future years, was cut 7% to $2.74bn in 2012, the bank said. Part of the bonuses will be paid in contingent capital bonds, which will be written off if UBS’s common equity ratio falls below 7% or the bank faces a bailout.
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