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Financials

UPDATE 1-UBS to slash costs in wealth management rejig - memo

(Adds detail, further quotes from memo)

ZURICH, May 3 (Reuters) - Swiss bank UBS is introducing a new organisational structure in its flagship wealth management business in a move which aims to cut costs by hundreds of millions of dollars, according to a memo seen by Reuters.

At a time of increased regulatory costs, negative interest rates and restrained client activity all banks are under pressure to cut costs.

“Reducing complexity will lead to some delayering and reductions in personnel, predominately in non-client facing areas, and decreasing our cost run rate by hundreds of millions,” wealth management head Juerg Zeltner told staff in a memo on Tuesday.

“The new structure will come into effect on 1 July 2016 and I want to create clarity as fast as possible.”

UBS confirmed the contents of the memo, which did not give details of planned job cuts.

Zeltner said the new structure would help give UBS, Switzerland’s biggest bank and the world’s largest wealth manager, greater consistency and standardisation.

It will combine UBS’s separate wealth management back office functions into one centralised unit.

UBS is also merging its wealth management divisions covering Europe and emerging markets into a new unit to be headed up by emerging markets head Paul Raphael.

Jakob Stott, head of wealth management for Europe, will take on the role of chairman for wealth management Europe and a divisional vice chairman “focusing on key global relationships”.

UBS’s move to a more global structure is in stark contrast to cross-town rival Credit Suisse, which is undergoing a major restructuring with a regional focus under Chief Executive Tidjane Thiam.

Earlier on Tuesday UBS posted adjusted first-quarter pre-tax profit in wealth management of 636 million Swiss francs ($672 million), down from 856 million francs a year ago, amid tough market conditions.

“Our underlying profitability has declined with pre-tax profits 26 percent lower than Q1 2015, a consequence of transaction revenues remaining low as clients sit on the side lines and our invested asset base being impacted by declines in global markets,” Zeltner wrote. “We believe the outlook remains challenging.”

$1 = 0.9463 Swiss francs Editing by Michael Shields

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