In a move to support its cost-cutting strategy and restore waning profit margins in the business, UBS Group AG UBS has finalized its plan to cut 56 back-office jobs in its Luxembourg-based wealth management business. Notably, the company spokesman declined to comment on the matter.
Initially, UBS had planned to slash 60 employees in Luxembourg. However, it lowered the number to 56, following the unions’ agreement to support the “redundancy plan.” The company plans to relocate these jobs to its office in Wroclaw, Poland.
The bank aims to reduce the impact of job cuts on the affected employees and secure them with other jobs within the bank or with an early retirement. UBS currently has 420 employees in Luxembourg.
Earlier in May, UBS took steps to reshape its wealth management organizational structure with an aim to curb costs by hundreds of millions of dollars to improve profitability. In July, UBS stated that it has accomplished two-third of its cost-cutting strategy of $2.15 billion, targeted to achieve by the end of 2017.
Why the Move?
Following the financial crisis, UBS has shifted its focus from investment banking to more on wealth management business. The bank had also announced a “hiring freeze” in July to cut costs in the unit. Additionally, this move comes in response to increased regulatory oversight, restrained client activity and low interest rate environment, resulting in high costs and deteriorating profit margins.
UBS, along with other banks, has been under pressure to cut expenditure and consolidate back-office functions in response to rise in costs and changing business requirements.
Earlier this month, UBS had announced its plan to relocate around 1500 of its London workforce to a European Union (EU) country, following Brexit. Similarly, Barclays PLC BCS slashed around 12,000 jobs in nine months (since the appointment of its new Chief Executive, Jes Staley in Dec 2015) to limit costs and improve bottom line.
The UBS stock inched down around 1% in the last trading session to close at $13.51 on NYSE.
Currently, UBS carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the same space include Banco Macro S.A. BMA and Grupo Financiero Galicia S.A. GGAL, sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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