Swiss bank UBS has reported $3.4 billion in losses and announced a shake-up of management and job losses as it became one of the biggest casualties yet from the problems in credit markets.
The bank said it would write down $3.42 billion in losses in its bonds portfolio and elsewhere, resulting in a third-quarter loss of up to $700m, its first quarterly loss in nine years. UBS said it would shed 1,500 jobs in its investment bank.
Investment bank head Huw Jenkins will leave along with group chief financial officer Clive Standish.
Marcel Rohner - who was named chief executive in July after the shock exit of CEO Peter Wuffli due to hedge fund losses - will assume control of the investment bank and risk-management expert Marco Suter will become chief financial officer.
In a separate announcement, rival bank Credit Suisse said it was also hit by the credit crunch but that it would remain profitable during the third quarter.
UBS's losses appear to exceed those reported so far by other investment banks. The fall-out from the sub-prime mortgage crisis has varied in the US, with Goldman Sachs reporting a near-80% jump in quarterly profit last month, and rival Bear Stearns Cos posting a 61% drop.
Investors have grown increasingly concerned that more banks might announce losses related to credit problems as they closed their books on a tumultuous third quarter. Persistent worries about the health of the banking system have weighed on financial markets around the world.
A meltdown in the US sub-prime mortgage market, sparked by growing defaults on riskier loans, has created a squeeze in credit markets around the world. Despite signs in recent weeks that the credit tightness may be easing, some banks continue to report they are struggling to find cash on wholesale lending markets.
