UBS has announced plans to wind down its fixed income business and lay-off 10,000 workers.
The bank is trying to adapt to tougher capital rules that make it more difficult for investment banks to turn a profit since the financial crisis.
Zurich-based UBS will focus on its private bank and a smaller investment bank, ditching much of the trading business that ran up $50bn in losses in the financial crisis.
The bank also took a $2.3bn hit last year from trader Kweku Adoboli, who is now on trial on charges of fraud and false accounting.
Chief Executive Sergio Ermotti, who took over after the Adoboli affair last year, is leading the three-year overhaul.
The bank aims to save $3.6bn on top of existing spending cuts of around $2bn.
Former investment bank co-head Carsten Kengeter will lead the isolation and winding down of its fixed-income activities that are no longer profitable as a result of tougher capital rules on riskier business introduced after the crisis.
The remaining investment bank - equities, foreign exchange trading, corporate advice, and precious metals trading - will be run by Andrea Orcel.
"This decision has been hard but it is necessary to create a UBS that is fit for the future," Mr Ermotti said. "The business model we are creating will be unique in the banking industry."
The measures translate to a 15% staff cut, taking UBS's overall staff to 54,000, from 63,745 now, already down from a 2007 peak of 83,500 as banks have shed tens of thousands of jobs globally since the financial crisis of 2008.
Of the job cuts, 2,000 will be front-office investment banking staff, the revenue generators.
About 2,500 positions will go in Switzerland, slightly more than that in the US, and the rest in Britain, Mr Ermotti said.
A smaller investment bank will leave UBS focused on its private bank, which looks after the affairs of the wealthy.
