Amidst waning profit margins and lagging revenues, it only appeared a matter of time before lenders resorted to hiring freezes – a step UBS AG has now taken to help restore its wealth management business back to profitability.
UBS, like its rivals in Europe and the US, has dealt with a range of issues during the year, which have collectively conspired to sap profits and diminish outlooks. By extension, share prices at leading banks have been in the doldrums, with inventors ramping up the pressure on executives to undergo new corporate strategies and initiatives.
UBS’s wealth management unit, one of the largest in the world, has abruptly announced a hiring freeze for the group in an effort to cut costs. The unit had largely been avoiding hires recently and has been relatively devoid of big name appointees throughout the whole of H1 2016.
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It is worth noting that the restrictions and freeze will apply only to support or auxiliary functions, not client advisers. Moreover, this excludes the firm’s brokerage business in the US and Canada. The largest level of cuts and woes have centered on lenders’ European businesses, with London facing the highest cuts over the past six months across the board.
The freeze follows on the heels of a dismal Q1 profit that sunk -64.0%, which was pinned in large part by a slump at the wealth-management and securities units. Since then, UBS, like many other banks, has consolidated elements of its back-office functionality and investment operations.
The steps taken by UBS are hardly novel in such times, namely as other banks have gone much further in shaping their workforces. Last October, Deutsche Bank announced a plan to phase out upwards of 35,000 jobs while other groups such as Barclays and Standard Chartered opted for entirely new retail strategies that featured lean operations and freshly combined business segments.