Crisis-hit UBS to axe 900 London bank jobs

Banking giant UBS has told staff it will axe 900 London staff by the end of June as the credit crunch threatens to turn into a jobs bloodbath in the City.

UBS management confirmed the size of the cull, which amounts to 10% of its 9000-strong London workforce, in a private meeting with staff representatives.

The cuts follow the Swiss bank's disastrous £19 billion losses following the meltdown in credit markets after the sub-prime mortgage crisis in the United States.

The bank has set a deadline of 23 June as it wants to make redundancies before it reports third-quarter earnings. UBS is now conducting consultations as it decides whom to axe in London.

Reports have suggested that UBS chief executive Marcel Rohner wants to cut around 3000 jobs globally at the bank, which employs more than 80,000 people.

Rohner has said he will announce where the cuts will fall in early May. But the fact that UBS has already begun moves to axe 900 posts in London would suggest the UK operation is being particularly badly hit.

A bank insider said: "It makes sense to cut in London because wages are so high."

UBS declined to comment on the scale of the cuts or whether it would be offering voluntary redundancies. It is thought the job losses will be across the board in investment banking. "We manage staffing levels in line with current market conditions," said a spokesman.

UBS has suffered far worse than any other European bank in the subprime crisis, writing off more than £19 billion in the past six months. It also launched an emergency £8 billion rights issue two weeks ago to bolster its finances.

The bank carried out a jobs cull last autumn when it axed 1500 worldwide - mainly in fixed income. Sources say London did not bear the brunt of those cuts.

UBS is not alone in having to slash jobs. American giant Citigroup is believed to be cutting 500 posts in London as part of a huge worldwide effort. Fallen US giant Bear Stearns is expected to axe hundreds here and many others are discreetly laying off staff and freezing recruitment.

Analysts at JPMorgan Chase estimate that 40,000 jobs could be lost in the City as a result of the credit crunch - double the gloomy forecast of 20,000 made by the Centre for Economic and Business Research earlier this week.

The crisis at UBS has prompted a political outcry in Switzerland, leading chairman Marcel Ospel to resign on 1 April. Since then, UBS shares have rallied. But activist investor Luqman Arnold, former president of UBS, has taken a 0.7% stake in the troubled bank and is calling for a complete management overhaul. He is opposing the selection of Peter Kurer, the bank's top lawyer, as its next chairman.

UBS faces a crunch shareholders' meeting on 23 April where it will need to win approval for its Swfr15 billion (£7.6 billion) rights issue. It also faces questions over a likely cut in its dividend payout.