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UBS Group AG Chief Executive Officer Sergio Ermotti gave a gloomy outlook to investors at a conference in London Wednesday, saying conditions in the first three months have been among the toughest in years.

The investment bank had “one of worst first-quarter environments in recent history,” Ermotti said Wednesday. There has been very little merger activity or initial public offering activity outside of the U.S., he said. Investment banking revenues are down about one third compared with a year ago. The bank is slowing hiring and some IT projects as it seeks to make up for weak markets.

Ermotti’s comments suggest the quarter is evolving even worse than the bank suggested last week, when it said clients so far have remained cautious in the first months of this year. UBS cut thousands of investment banking jobs over the last decade as it tilted to private banking. That strategy has become a blueprint for rivals including Credit Suisse Group AG, but it leaves the bank open to revenue dips after market corrections or when clients trade less.

UBS fell 1.7 percent at 9:54 a.m. in Zurich trading, the second-worst performer in the Bloomberg Europe 500 Bank and Financial Services Index.

Global wealth management revenue is down about 9 percent from a year ago, Ermotti said, with the gap narrowing as the quarter proceeded. Net new money should be positive, and the bank aims to offset the drop in revenue with a 5 percent reduction in costs, he said.

For the investment bank, the first quarter continues a slide in the final months of last year, when it posted a $47 million loss because clients, particularly in Asia, stayed on the sidelines. That was a stark contrast to the prior year, when the investment bank was a bright spot that consistently beat analyst expectations under former boss Andrea Orcel.

Orcel in September accepted an offer to become CEO of Banco Santander SA, though the offer was later rescinded in a dispute over pay.

Ermotti is struggling to persuade investors that he can further extend UBS’s position in European banking. The stock lost 32 percent of its value last year despite positive financial results.

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