(ZURICH) UBS fell the most in more than nine years in Swiss trading after reports that the bank may cut as many as 8,000 jobs, propose a new capital increase and sell businesses.
UBS fell 4.02 francs, or 14 per cent, to 24.42 francs by 134 pm in Zurich. If the shares close at this price, it would be the biggest drop since Sept 30, 1998.
Credit default swaps on UBS jumped 25 basis points to 235, according to Deutsche Bank.
UBS, Europe's biggest bank, plans to cut 5 per cent to 10 per cent of jobs across its different units and may also propose a capital increase at its shareholders' meeting in April, according to a report in SonntagsZeitung, which cited unidentified managers present at the company's top executives' meeting in Berlin last week.
UBS on March 14 denied a CNBC report that it may seek to sell its Paine Webber US brokerage unit to raise money.
'If the bank were contemplating a disposal this suggests a new level of desperation for UBS at raising capital,' Peter Thorne, a London-based analyst at Helvea, said in a report.
'Coming at the same time as the collapse of Bear Stearns and concerns about the financial system in general, and banks with suspect balance sheets in particular, we expect continued pressure on the UBS share price.'
Bear Stearns had to sell itself to JPMorgan Chase for US$240 million, about 90 per cent less than its value last week, after clients, alarmed by speculation about a cash shortage, withdrew US$17 billion in two days.
The Paine Webber division 'is not up for sale', UBS spokesman Mark Arena said on Friday. Axel Langer, another spokesman for the bank, said on Sunday that the Berlin meeting occurred and that job cuts may take place, though there are 'no concrete plans' to eliminate positions.
He declined to comment on whether a capital increase was discussed in Berlin or is under discussion.
Tobias Lux, a spokesman for the Swiss Federal Banking Commission, said the regulator is monitoring the liquidity situation at Swiss banks.
'The stable liquidity situation of the two big banks hasn't changed,' he said, referring to UBS and Credit Suisse Group.
UBS raised 13 billion Swiss francs (S$18.2 billion) from investors in Singapore and the Middle East to shore up capital eroded by US$19 billion in writedowns on debt assets and loans last year.
The bank may mark down assets by 15 billion Swiss francs in the first quarter, 'wiping out 2008 profits', analysts at Keefe, Bruyette & Woods Ltd wrote in a note to clients on March 11\. \-- Bloomberg
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