Embattled Swiss bank UBS on Wednesday said it would slash 8,700 jobs in a bid to cut costs after it reported fresh losses for the first three months of this year.
Switzerland's biggest bank said its losses for the first quarter reached about two billion francs (1.32 billion euros, 1.75 billion dollars), incurred on illiquid assets that have now been isolated in a fund created by the Swiss National Bank.
UBS has been struggling to recover after losing billions in the financial crisis. In order to make "substantial cost savings" of up to four billion francs, the bank said it would make thousands more redundant.
"Major job cuts are unfortunately unavoidable. UBS expects to reduce the number of its employees to about 67,500 in 2010," said the bank, which employed 76,200 people at the end of March.
The latest round of cuts will include 4,000 jobs in its Wealth Management and Swiss Bank unit.
They come on top of 11,000 job reductions which have been announced since October 2007.
The bank's new chief executive, Oswald Gruebel, warned that UBS was not out of the woods.
"You should not assume that this will bring about a marked improvement in our results as early as the next few quarters. Our outlook remains cautious and we face many uncertainties," he told shareholders during the bank's annual general meeting.
The bank's shares tumbled 8.67 per cent at opening, before regaining ground. At mid-day, it was trading down 3.6 per cent at 12.79 francs (1028 GMT).
Zuercher Kantonalbank analyst Andreas Venditti noted in particular that the bank's Tier 1 ratio, which was around 10 per cent at the end of March, would "fuel speculation of further capital raising."
Analysts at Keefe, Bruyette & Woods described the bank's capital position as "less secure than many may have previously assumed."
The ratio is a measure of capital adequacy or financial strength.
Under new rules announced by Swiss regulators last year, UBS would by 2013 have to fulfill a minimum ratio -- 16 per cent -- that is up to twice as high as the international 'Basel II' minimum requirement of 8.0 per cent.
UBS also said it has yet to stem an outflow of funds.
Net money outflow for the Wealth Management and Swiss bank division alone reached 23 billion francs in the first quarter, but this was balanced by a 16 billion franc inflow into its Wealth Management Americas unit.
"The outflow was mainly recorded after the announcement of the agreement in connection with the investigation into our cross-border activities for US clients," said Gruebel.
UBS is still facing a US government lawsuit to recover the details of 52,000 US customers suspected of tax offences. The bank was forced to pay 780 million dollars to US justice authorities in February to settle other charges of assisting tax fraud.
Pointing to attempts by countries to clamp down on tax cheats, Gruebel said UBS was "under particularly close scrutiny in this regard."
"The operating conditions for cross-border wealth management will change, and this will affect how our clients act. We shall make sure that this does not catch us unprepared," he said.
Meanwhile, the group's incoming chairman, Kaspar Villiger, warned against "extreme" public pressure on high executive pay, saying that the bank was starting to lose out in recruiting the best as it trims costs.
Salaries at UBS have "fallen more than the competition's," said Villiger in a speech to be delivered during the shareholders' meeting.
"But we're seeing increasing evidence that we're starting to lose our competitive edge with regard to recruiting the best of the best.
"This should be a message to those who think the bank should take more extreme measures," he added.