UBS to Slash 10,000 Jobs, Bayer Agrees to Acquire Schiff for $1.2 B

Arthi Gupta
30 Oct, 2012
New York City

The European indexes rose on upbeat corporate earnings. German jobless rate remained unchanged at 6.9% in October and UBS plans to slash 10,000 jobs. Bayer HealthCare agreed to acquire Schiff Nutrition for $1.2 billion.

[R]1:30 PM Frankfurt – The European indexes rose on upbeat corporate earnings. German jobless rate remained unchanged at 6.9% in October and UBS plans to slash 10,000 jobs. Bayer HealthCare agreed to acquire Schiff Nutrition for $1.2 billion.[/R]

European indexes edged higher after a string of corporation reported weaker but better than expected earnings. Spanish economy fell into a deeper recession and inflation edged up to 3.5%.

Swiss bank, UBS plans to cut around 10,000 jobs by 2015 and exit from certain businesses in its investment banking operation. The bank also reported a loss of Sfr2.2 billion in the quarter to September on restructuring costs and charges linked to its own debt.

In Paris trading, the CAC-40 Index climbed 19.76 or 0.6% to 3,428.65 and in Frankfurt the DAX Index edged higher 51.40 or 0.7% to 7,254.85.

The yields on Spain’s benchmark 10-year declined one basis point to 5.65%. Italian 10-year yield fell one basis point to 5.01%.

German Unemployment Climbs

Germany''s unemployment rose 20,000 to 2.94 million in October from a month ago, data from the Federal Labor Agency showed today.

The seasonally adjusted jobless rate remained unchanged at 6.9% in October.

In another report, the number of German residents in employment increased 0.8% or 324,000 on an annual basis to 41.8 million in September, preliminary data released by the Federal Statistics Office showed.

Spain Inflation Rises

Spain''s annual inflation based on the consumer price index rose to 3.5% in October from 3.4% in September, flash estimates from the statistics office INE showed today.

The statistics office is set to publish final data on November 13.

Separately, the Spanish economy contracted 0.3% sequentially in the third quarter, after falling 0.4% in the second quarter, preliminary data released by statistics office INE showed.

On an annual basis, the gross domestic product contracted 1.6% in the third quarter from 1.3% in the second quarter.

UBS Plans to Slash Jobs

UBS AG plans to cut around 10,000 jobs by 2015 and exit from certain businesses in its investment banking operation. By 2015, UBS is likely to have a headcount of around 54,000 from the current 64,000.

The Zurich based bank said most of the cuts will fall in its fixed income business and the rest of the investment banking will focus on advisory services, equities, commodities and currencies trading and research.

The company said it is targeting incremental Sfr3.4 billion annual cost savings with total savings of Sfr5.4 billion by 2015; above the Sfr2 billion cost savings program announced in August 2011. The company estimates these changes will take three years to fully implement and anticipates restructuring charges of Sfr3.3 billion over the same period.

UBS swung to a loss of Sfr2.2 billion in the September quarter compared to net income of Sfr1 billion a year ago period. Loss in the investment banking increased to Sfr2.9 billion from Sfr650 million a year ago and pre-tax profit in the wealth management division fell 32% to Sfr600 million. Pre-tax profit in its corporate and retail banking declined 40% to Sfr409 million.

After the restructuring the bank will lower its risk weighted asset to Sfr200 billion by 2017 from the current Sfr250 billion.

UBS also said it plans to increase its Tier 1 ratio to 11.5% by next year from 9.3% according to Basel III rules.

Bayer Agrees to Acquire Schiff Nutrition

Bayer HealthCare LLC agreed to acquire Schiff Nutrition International, Inc. for $1.2 billion or for $34 a share. Closing of the deal is expected by the year-end.