UBS to cut 5,500 jobs, has BlackRock debt deal

By Thomas Atkins

ZURICH (Reuters) - UBS AG will cut 5,500 jobs or almost 7 percent of its workforce as Europe's biggest subprime casualty reverses a rapid expansion into investment banking.

The bank also said it has a preliminary deal with U.S. asset manager BlackRock Inc to sell a $15 billion portfolio of subprime mortgages, a clear signal the market for ailing U.S. real-estate assets is becoming more liquid.

"We see clearly that there are sophisticated investors coming into this market, and this itself we view as strong support," Chief Executive Marcel Rohner said in a conference call with journalists on Tuesday.

UBS cautioned that conditions in financial markets were still tough and declined to offer any results forecast.

But it said it was able to continue its restructuring plan without needing to raise more capital beyond existing measures that total around 39 billion Swiss francs.

"The same is true for UBS as for the entire sector: The worst is likely over," said analysts at bank Wegelin.

"However, there is little momentum for the future," Wegelin said. "Even if the job cuts are able to lower costs, the current outlook is anything but rosy (and is) vague due to the lack of any guidance."

UBS reported a first-quarter loss of 11.535 billion Swiss francs ($10.93 billion), slightly better than it had announced in April.