UBS, Switzerland's biggest bank, has unveiled plans to slash hundreds of millions of dollars in costs by reorganising its wealth management business.
European lenders are facing an enormous amount of pressure to curb costs, amid subdued client activity, increased regulatory costs and negative interest rates. In March, Credit Suisse, Switzerland's second-largest bank, confirmed plans to cut 2,000 jobs in a bid to keep a lid on soaring costs.
"Reducing complexity will lead to some delayering and reductions in personnel, predominately in non-client facing areas, and decreasing our cost run rate by hundreds of millions," UBS' wealth management chief Juerg Zeltner told staff in a memo quoted by Reuters on Tuesday (3 May).
"The new structure will come into effect on 1 July 2016 and I want to create clarity as fast as possible."
The Swiss lender, which has since confirmed the content of the memo, declined to comment on any possible job cuts, but claimed its separate wealth management back office functions will be merged into a single centralised division.
The bank, the world's largest wealth manager, indicated the new structure will guarantee greater consistency and standardisation within its operations, adding it was in the process of combining its wealth management operations across Europe and emerging markets into a single division.
News of the organisational reshuffle comes as the Switzerland-based bank saw pre-tax profit in its wealth management division decline from CFH 856m (£460.3m, €581.5m, $672m).
"Our underlying profitability has declined with pre-tax profits 26% lower than in the first quarter in 2015, a consequence of transaction revenues remaining low as clients sit on the side lines and our invested asset base being impacted by declines in global markets," Zeltner added. "We believe the outlook remains challenging."