Last Tuesday, August 23, the Union Bank of Switzerland (UBS) announced that it would be firing thousands of its employees.
Although having already eliminated 5,000 jobs earlier this year, the Swiss global financial services company released a statement saying that it plans to terminate another 3,500 jobs in order to save $2.75 billion. The firm has seen profits steadily decline due to the euro zone crisis, government regulations and the rise of the Swiss franc.
Headquartered in Basel and Zürich, Switzerland, UBS specializes in providing investment banking, asset management, and wealth management services for private, corporate and institutional clients worldwide.
The UBS operates in more than 40 countries, has a strong presence in all major financial centers, occupies offices in over 50 countries, and--for now--employs more than 64,000 people. It is therefore considered the world's second largest manager of private wealth assets and maintains over $2.68 trillion in assets.
It is precisely because of this far-reaching influence (and current asset balance) that the rise in layoffs should be the cause for some consternation.
According to Business Insider, "The layoffs are unfortunately necessary as Euro banks are struggling to cope with an increased regulatory environment, the crisis in the Eurozone, and dwindling investment bank profits." But it is not just the UBS that is struggling.
This month alone, UBS, Barclays, Credit Suisse, RBS, and HSBC have all announced layoffs numbering in the thousands. In fact, the number of employees that have been "let go" this year has surpassed 40,000:
HSBC - 30,000 job cuts Barclays - 3,000 job cuts
UBS: 3,500 job cuts, mainly from its investment bank (where there is the least amount of investor confidence)
Royal Bank of Scotland - 2,000 job cuts
Credit Suisse - 2,000 job cuts
Carsten Kengeter, the head of UBS Investment Banking division, sent out a memo earlier this week saying that "this would be tough and that everyone should stay focused," according to Business Insider.
This is all slightly alarming because it signals that the UBS, an organization that controls and influences a very large portion of the world’s financial stability, is struggling to produce favorable results in the form of a profit.
Furthermore (and more dangerous than alarming), the woes of the UBS could be the thing that emboldens Christine Lagarde, the chief of the IMF, and her coterie of Keynesian-minded associates to take drastic and potentially catastrophic steps towards a supposed "alleviation" of the pressures felt by European financial institutions.
We pray it does not come to that.