The reductions would include as many as 2,600 positions at the securities division, the company said in a statement yesterday.

It also said it plans to exit the municipal bond business and sell US$15 billion in distressed assets to a newly created fund managed by BlackRock.

UBS had a net loss of 11.5 billion Swiss francs (S$14.8 billion) in the first quarter.

The job cuts are on top of 48,000 reductions announced by the world's biggest banks and securities firms in the past year, as write-downs and losses from the United States sub-prime crisis swelled to US$319 billion.

UBS chief executive Marcel Rohner and newly elected chairman Peter Kurer said in a letter to shareholders that they expected 'tough business conditions', which had caused US$38 billion in markdowns at the bank, to continue.

UBS' first-quarter loss after write-downs of US$19 billion was in line with its estimate on April 1. It had a 3.03 billion Swiss franc profit a year earlier.

The cuts will save about three billion Swiss francs a year, it said.

The world's biggest wealth manager saw clients pulling out 12.8 billion Swiss francs in the first quarter, the first reduction since the second quarter of 2000.

Mr Rohner and Mr Kurer told shareholders at the annual meeting on April 23 that they would slim down the securities unit while focusing on maintaining its 'core' wealth management franchise.

'We expect this difficult environment to remain and be characterised by a continuing unfavourable global economic climate, deleveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity,' they wrote yesterday. 'The impact will affect all of our businesses, and we are required to manage costs, resources and capacity very actively.'

The bank already eliminated 1,500 jobs in the investment bank at the end of last year. It brought in Mr Jerker Johansson from Morgan Stanley as the new head of the investment bank in mid-March, and said last month it would put assets related to US residential real estate into a separate division that might be spun off later.

Mr Rohner said UBS would sell sub-prime and Alt-A mortgage assets to BlackRock by the end of next month.

Mr Johansson said on a conference call yesterday that new job cuts would be made at all levels.

About 26 per cent of the headcount will be cut in fixed-income, and about 9 per cent in investment banking and equities, he said.

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