SWITZERLAND’S biggest bank UBS AG is to axe 3,500 jobs to shave 2 billion Swiss francs (US$2.5 billion) in annual costs as it joins rival investment banks in reversing the post-crisis hiring binge and preparing for a tough few years.

UBS said yesterday almost half the cuts would be in investment banking. It had already said it would cut jobs when it posted weak second quarter profits last month as its underperforming fixed income business weighed.

Like rival Credit Suisse Group AG, UBS has been grappling with rising regulatory costs and a red-hot Swiss franc, which are eating into profits.

“The cost cutting is an admission of defeat. UBS overhired after its near-collapse in early 2009, but was unable to win back market share,” said Kepler Capital Markets analyst Dirk Becker.

“With more difficult markets, the economics of its investment bank became so uncompelling that the group now has to retreat,” Becker said.

“The measures announced today are designed to improve operating efficiency. UBS will continue to be vigilant in managing its cost base while remaining committed to investing in growth areas,” UBS said.

Banks are slimming down as weak investment trading this year looks set to continue, leaving many carrying high costs after hiring aggressively in 2009 and early 2010 when trading income surged following the financial crisis.

“Since UBS announced their 2 billion franc cost saving initiative, the economic environment has deteriorated even further, making these plans seem inadequate,” Helvea analyst Peter Thorne said.

UBS, which had to be rescued by the state in 2008 after massive losses on toxic assets, slashed staff to around 64,000 from 78,000 before the financial crisis, but it grew again in the last year to over 65,700.

Around 45 percent of the cuts will come from UBS’s investment bank, 35 percent from wealth management & Swiss bank, 10 percent from global asset management and 10 percent from wealth management Americas. (SD-Agencies)