UBS TO CUT JOBS AS SUB-PRIME CRISIS CONTINUES TO HIT - In the wake of the sub-prime credit crisis, Swiss bank UBS sys its cutting 5,500 jobs, or 7% of its workforce. This morning it said conditions in the financial markets and the global economy are difficult. Up to 8,000 job cuts had been expected. UBS is Europe's biggest banking sector casualty of the sub-prime crisis after posting over $37 billion in writedowns. Its first quarter net loss, announced this morning, was a further $10 billion. The bank also said it has a preliminary deal with US asset manager Blackrock to sell a $15 billion portfolio of sub-prime mortgages, a sign that the market for ailing US real-estate assets is finally becoming more liquid.
Justin Urquhart Stewart of Seven Investment Management says he suspects the 5,500 job cuts may not be the final figure. He says that if the bank is going to cut jobs in its investment banking division, which used to make a lot of money for the bank, it has to make sure it is not cutting off future profit lines as well. Mr Urquhart Stewart says there will be more cuts at other banks, and warns the City of London and Canary Wharf will be significantly hit.
He warns that the job cuts will be in a broader area than just investment banking, as credit cards, and fund managers also suffer. 'Unlike the year 2000 which affected dot coms and telecoms, this is much broader and we have to be more cautions as the whole economy slows down,' he states.
***
PENSIONS SIGN-UP STILL NOT AS QUICK AS HOPED - Today is Pensions Sign Up Day. Apparently three quarters of those who do not have pensions do not think the state pension will be adequate to meet their expectations in retirement.
David Malone, the head of information services at the Penisons Board, says that while people are aware they should do something, pensions are not a glamorous topic and they keep putting it off. He says the pensions awareness campaign is being run to encourage people to take that first step. The target set out in the national pensions initiative was that 70% of those over 30 in the workforce ideally should have private pension provision. That currently stands at 62%, Mr Malone states. He says that while the figure is going in the right direction, it is not going as quickly as would have been liked.
***
MORNING BRIEFS - Oil broke through $120 a barrel for the first time yesterday, and it is still there today in Asian trade. This morning it is trading at $120.17 a barrel, having yesterday hit $120.36. The current peak is down to the weak dollar and supply concerns from Nigeria and Iran.
*** Figures for the first six months of its financial year from United Drug show that profits before tax, compared to the same period last year, are 15% higher at €33.2m, and revenues are 9% higher at €845m. It says though, that changes in government healthcare and pharmaceutical rules, could adversely affect the group.
*** Yahoo's shares fell by 20% yesterday after Microsoft dropped its $47.5 billion bid for the company. Yahoo's shareholders are furious the deal did not go through, and are likely to cause trouble for the board coming up to the company's AGM in July, where all ten board members face re-election.
*** According to Ben Bernanke, the chairman of the US Federal Reserve, late mortgage payments and home foreclosures pose considerable dangers to the US economy, and he again urged Congress to take steps to alleviate the problems. He said that high rates of delinquency and foreclosure can and are having substantial spillover effects on the housing market, the financial markets and the broader economy.
*** Jean Claude Trichet, the president of the European Central Bank, has been talking about his least favourite thing - inflation. Rising food prices was his current topic, as it comes on top of rising energy, metal and commodity prices. Mr Trichet was talking to his G10 Central Banker colleagues in Basel, Switzerland.
*** Swiss bank UBS is cutting 5,500 jobs, or 7% of its workforce, in the wake of the subprime credit crisis. Today it said conditions in the financial markets and the global economy are difficult. UBS is Europe's biggest banking sector casualty of the sub-prime crisis after posting over $37 billion in writedowns.
*** On the currency markets the euro is trading at $1.5520 and 78.7 pence sterling.
