* UBS job cuts part of 3.4 bln Sfr cost-cut programme
* Shares up over 5 pct after 7.3 pct jump on Monday
* Job losses mostly in Switzerland, United States, Britain
* Some London staff already barred from office
* Q3 net loss of 2.172 bln Sfr vs Reuters poll 457 mln Sfr
* UBS flags Q4 net loss amid revamp, own debt charges
ZURICH, Oct 30 (Reuters) - Swiss bank UBS unveiled
plans on Tuesday to fire 10,000 staff and wind down its fixed
income business, returning to its private banking roots as it
adapts to tough capital rules that make it harder to turn a
profit from trading.
Zurich-based UBS will focus on wealth management and a
smaller investment bank, ditching much of the trading business
that ran up $50 billion in losses in the financial crisis and is
embroiled in a global LIBOR rate-fixing investigation.
Some UBS staffers took to social media to air their
frustration after dozens of traders were stopped from entering
the bank's London offices on Tuesday.
Some staff turned up to work to find their employee cards no
longer worked at the turnstile and were then escorted to human
resources, according to various sources within the bank.
Once at human resources, they received their personal items
in a bag with a letter saying they would have two weeks paid
leave, after which they were to return to collect their
redundancy package, the sources said.
Chafing at their treatment, several tweeters revived "U've
Been Sacked," an invented acronym for UBS which circulated in
1998 after the bank fired hundreds of staff following the merger
of the two big Swiss banks which formed today's UBS.
Chief Executive Sergio Ermotti, a former Merrill Lynch and
UniCredit banker, is leading the three-year overhaul aimed at
saving 3.4 billion Swiss francs ($3.6 billion), on top of cuts
of 2 billion francs already announced last year.
Investment bank co-head Carsten Kengeter leaves Ermotti's
top team to lead the winding down of fixed-income activities
that are no longer profitable due to stricter capital rules on
riskier business introduced after the financial crisis.
The remaining investment bank - handling equities, foreign
exchange trading, corporate advice and precious metals trading -
will be run by Andrea Orcel, a recent Ermotti hire from Bank of
America who had co-run the unit with Kengeter.
"Change is necessary for the entire banking industry,"
Ermotti wrote in a memo to staff. "By acting now, we are getting
ahead of our competitors and reshaping our business so that it
can deliver sustainable results over the long term."
FIFTEEN PERCENT STAFF CUT
The measures translate to a 15-percent staff cut, taking
UBS's overall staff to 54,000, from 63,745 now. It was already
down from a 2007 peak of 83,500 as banks have shed tens of
thousands of jobs globally since the financial crisis of 2008.
Of the new job cuts, 2,000 will be front-office investment
banking staff, the revenue generators. Cuts among support staff
will bring the layoffs to above 5,000 in the securities unit.
About 2,500 positions will go in Switzerland, slightly more
than that in the United States, and the rest in Britain.
A smaller investment bank will leave UBS focused on its
private bank, which looks after the affairs of the wealthy. With
1.6 trillion francs in assets, it is the second-largest
operation of its kind in the world after Bank of America.
UBS shares, which soared 7.3 percent on Monday in
anticipation of the announcement, were up another 5.4 percent at
13.83 francs by 1511 GMT in exceptionally heavy trading, their
highest since July 2011. That compared with a 0.9 percent rise
for the European banking sector index.
Investors in Switzerland, where anti-banker sentiment ran
high after UBS took a government bailout in 2008 following more
than $50 billion in mortgage losses, welcomed the overhaul.
"This restructuring should have happened after the rescue,"
retail investor Brigitta Moser-Harder, who has campaigned
against hefty UBS bonuses, told Reuters. "The high cost of the
investment bank has always been problematic."
Now, UBS is effectively admitting failure in its attempt to
crack the fixed-income big league, launched a decade ago by
former chairman Marcel Ospel. It will retreat to an advisory
business rooted in the British merchant bank Warburg, which it
bought in 1995.
The bank suffered a $2.3 billion hit last year blamed on
London trader Kweku Adoboli. He is now on trial on charges of
fraud and false accounting.
Germany's Deutsche Bank said on Tuesday it hopes
to benefit from the UBS cuts as its investment bank delivered
record third-quarter sales and trading revenue.
Credit Suisse said last week it was also cutting
more costs to boost its profits and capital but did not announce
the same kind of radical restructuring as UBS.
BORING BANKING IS GOOD BANKING
The bank aims to pay out more than 50 percent of profits to
shareholders from 2015, after paying its first post-crisis
dividend last year, a modest 0.10 francs a share. It has put
away funds in the third quarter for an unspecified dividend this
year, UBS financial chief Tom Naratil told journalists.
UBS swung to a third-quarter net loss of 2.172 billion
francs, hit by restructuring charges and 863 million francs
written off the value of its own debt. It said the costs related
to the investment banking split would also lead to a
fourth-quarter and full-year loss.
While the private bank also faces challenges from eroding
Swiss banking secrecy, it secured 7.7 billion francs in net new
money from clients in the third quarter. That represents the
highest result in a third quarter - typically a slow one for the
business due to summer holidays - in five years.
"UBS is returning to its boring roots as a discreet Swiss
bank," said Mark Williams, author of a study of systemic risk in
the latest financial crisis entitled "Uncontrolled Risk".
"UBS is setting an important new direction for the globe's
largest banks - boring banking is good banking," said Williams,
who teaches finance at Boston University School of Management.
UBS is aiming to reduce risk-weighted assets to below 200
billion francs by the end of 2017, from 301 billion currently.
Of this, the investment bank will account for roughly 70 billion
francs, less than half of what it accounts for today.
