Switzerland's biggest bank by assets will bringlarge parts of its fixed income trading business into a non-core unit leaving a reduced investment bank with equities trading, foreign exchange and advisory roles.
The non-core operation will be headed by Carsten Kengeter, current co-head of the investment bank, and will be wound down over time, two people close to the situation said.
The split will lead to another reduction in risk-weighted assets of up to SFr100bn ($107bn) and will trigger the loss of thousands of jobs in the group's back office over the next few years.
The job cuts will amountto almost a sixth of the bank's workforce of 63,500 at the end of June. They will not happen all at once and the precise number is still unclear as the exact impact on back-office functions has not yet been determined.
It comes on top of another -- still ongoing -- program announced last year to cut 3,500 jobs.
The move highlights how banks around the world are trying to adapt to a radically changed regulatory andmarket environment thathas left them with lower returns and much higher capital needs for certain business areas and national subsidiaries.
The strategy, hammered out in several executive board meetings in New York this week and set tobe announced next Tuesday, will trigger a large reduction of complexity and costs in the bank's support functions such as its information technology department.
"There were several options on the table but UBS has decided on the most radical one," one person familiar with the plan said.
The plan was devised bySergio Ermotti, who came in a chief executivelast year in the wake of an alleged rogue trading scandal that left UBS with a $2.3bn loss in the investment bank
