UBS has announced its intention to restructure and streamline its business operations, which for the employed means job uncertainty in the near future. UBS intends to slash up to $2.5 billion on the news of its quarterly profits from early 2011 having fallen nearly in half from a year ago.
The announced results were a disappointment to both the bank and investors, though not altogether a surprise given the current economic uncertainty in the global economy, though these problems were compounded by the weaker Swiss currency, as well as slower trading, which translated to significant problems for the bank. The bank does not expect to reach its intended profit goal in the near future.
The $2.5 billion in savings will take place over the course of the next few years, and although the announcement did not include specific plans, it is likely to mean a reduction in the workforce of the bank, among other things.
Similar announcements have come from other high-profile banks in recent years, though in those cases, such as HSBC, the bank announced increasing profits despite intending to dismiss many employees in spite of such a lucrative announcement. Nowhere in the announcements available from either of these organizations was the intention of reducing, for example, executive pay, bonuses, or other entitlements for high-profile individuals. Workforce reductions and “streamlining” in the banking sector translate almost exclusively to lower-level employees losing much needed jobs while simultaneously remaining aware of high-end executive salary remaining at exorbitant levels.
In other countries, particularly in Japan, where CEOs have foregone personal compensation during periods of significant economic turmoil for their own organization, these sorts of things would occur less frequently. In countries where taxpayer-funded bailouts have become the norm, bonuses and other CEO salary package increases have become something of a source of resignation, rather than a retaliation.
The banking sector has been experiencing significant troubles in many countries, and while some of them continue to thrive, others have been experiencing extraordinary difficulties, leading to further acquisitions which have expanded the market presence and political clout of certain organizations. “Too big to fail” has become even more exacerbated as the largest of the multinationals continue their consolidations to the point that failing to secure a bailout would likely be due to simple financial shortcomings rather than deliberate refusal on the part of the political decision makers.
At any rate, as UBS seeks to streamline its operations""which, in fairness, is perfectly acceptable for them to do, especially given the stringent financial predicament in which they currently find themselves""it would nevertheless be a significant boost to employee morale for the CEO and other high-level power players within the organization if an immediate, knee-jerk reaction to the financial crises experienced by its assets and other business ventures were to announce an immediate salary reduction on the part of the highest-level executives, until the situation returned to normal; perhaps not instead of workforce reductions, but at the very least, in addition to. It would at least be a nice touch.
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