The cuts were fewer than the 5,000 which had been feared, and UBS is far from being the only bank which has announced job cuts recently - everyone from HSBC to Credit Suisse has been busy ‘rightsizing’ their workforces. But perhaps the need to be seen to take remedial action is greater since the firm announced a 23% drop in pre-tax profits for the three months to June this year. Along with most of the industry, UBS is blaming the general economic slowdown - plus those pesky new Basel III requirements that it should hold more capital - for the move.
Meanwhile across the pond in Wall Street, Goldman Sachs shares have wobbling, down 5% over fears that the bank's legal wrangle with the US Department of Justice may be about to heat up again. Why? Because boss Lloyd Blankfein has apparently hired himself one the best defence counsels around, one Reid Weingarten, partner in Washington-based law firm Steptoe & Johnson.
Although Blankfein has not been charged with any offence, the fact that Weingarten is a specialist in white-collar crime whose previous clients include none other than former Worldcom boss and convicted fraudster Bernie Ebbers, may account for the market jitters. Goldman Sachs insists that it’s all a routine matter - people who expect to be interviewed as part of a legal enquiry do usually hire lawyers, after all…
What’s it all about? You will recall that following a two year investigation, a senate committee earlier this year decided that Goldman Sachs misled investors over the sale of mortgage backed securities, and referred the evidence to the DoJ. Carl Levin, who chaired the committee, said at the time ‘In my judgement, Goldman clearly misled their clients and they misled congress.’
Blankfein meanwhile vigorously denies any suggestions that his firm acted irresponsibly, and despite its share price fluctuations the sentiment on Wall Street remains generally that criminal charges are unlikely to result from this investigation. But Goldman has already had to cough up one - unrelated - $550m fine to the SEC in recent months, and this latest suggestion that it’s legal travails may not be over will be most unwelcome. Watch this space.