UBS Group AG Chief Executive Officer Sergio Ermotti gave the most decisive verdict yet on the difficult markets faced by Europe’s investment banks, describing conditions as the toughest in years.
UBS will slow down hiring and deepen cost cuts by about $300 million as it confronts one of the worst first-quarter environments in recent history, Ermotti told investors at a conference in London on Wednesday.
The downbeat outlook sent UBS shares down as much as 2.6 percent and prompted declines at investment banking rivals Credit Suisse Group AG and Deutsche Bank AG.
Swizerland’s largest bank adds to the evidence that conditions haven’t improved from the fourth quarter when French lender Societe Generale SA issued a profit warning for its markets business.
Executives at both Citigroup Inc. and JPMorgan in recent weeks have warned of weaker trading revenues compared with a year ago. January was a terrible month for the trading business at Deutsche Bank, people familiar with the matter have said.
Ermotti’s comments suggest the quarter is even worse than the bank suggested last week, when it said clients have remained cautious in the first months of this year.
UBS cut thousands of investing banking jobs over the last decade as it tilted toward private banking. That strategy has become a blueprint for rivals including Credit Suisse, but it also leaves the bank open to revenue dips after market corrections or when clients stay on the sidelines.
Volatility and volumes are weak compared with the euphoric start to last year, and investors have not yet regained confidence.