The bank confirmed more massive losses today - SFr11.5 billion in the first quarter of the year, driven by $19 billion of writedowns on exposure to US real estate and structured credit holdings. By the end of the year, it said, 2,600 jobs will have gone from the investment bank division, with the total group workforce set to shrink by 5,500 by mid-2009.
"UBS expects financial industry conditions to remain difficult – with a continuing unfavourable global economic climate, deleveraging by institutional and private investors, slower wealth creation, and lower trading and capital markets activity. This will require UBS to manage costs, resources and capacity very efficiently," the bank said.
The bank added it had changed its risk measurement techniques: exposures to US mortgages are no longer included in its daily calculations of value at risk (VAR). " Value at risk is neither an adequate measure of the risks in such illiquid positions nor an appropriate risk control tool," UBS said in its first-quarter report. As a result, 10-day 99%-confidence VAR fell from SFr665 million to SFr306 million, the bank said, and actual losses exceeded VAR on 11 days in the quarter.