UBS (NYSE:UBS) is making a bid to increase the unemployment rate all on its own. The bank will lay-off 5,500 people, mostly investment bankers. It will also sell a package of $15 billion portfolio of subprime mortgages to Blackrock (NYSE:BLK). According to Reuters,"UBS cautioned that conditions in financial markets were still tough and declined to offer any results forecast."
The UBS comments about what happens next are a coded message that layoffs at the firm may not be over. UBS has suffered as much or more from subprime write-downs as any bank in the US or abroad.
The news is especially bad for people employed at brokerages and big banks. A continuing spike in mortgage defaults could cause more difficulty in the pool of financial instruments created around the market. That, in turn, could cause more write-offs at large banks triggering the need to raise capital and cut costs.
Tens of thousands of people have been fired on Wall Street already. The news out of UBS shows that the process is far from over.
Douglas A. McIntyre is an editor at 247wallst.com.
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