2,000 UBS jobs to be axed by end of year

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It said it will pull out of commodity trading all together and substantially cut back on real estate & securitisation and proprietary trading.

They are the two areas mainly responsible for the mortgage-backed securities and other toxic assets which have cost UBS $36.7 billion (£20.7 billion) in writedowns in the last 18 months.

UBS declined to say where job cuts would fall geographically, but a spokesman said: "The areas we are closing or cutting back are much bigger in New York than they are in London. But most of the cuts will be in the US and UK."

Industry sources say several hundred jobs could go at the group's Broadgate headquarters, where most of its 7000 employees work. Most will be through compulsory redundancies.

Jerker Johansson, chairman and chief executive of the investment bank, said: "The ongoing crisis in the financial markets and dramatically changed industry dynamics require us to recalibrate our business.

"While the revenue outlook is uncertain, these measures will allow us to focus on our strengths, reduce the cost base to a more sustainable level and position our core businesses for growth once the fundamentals improve."

He said that UBS would concentrate on equities, corporate finance and foreign exchange and related areas of trading.

By the end of this year UBS will have slashed its headcount from the 23,000 it was at its peak in the third quarter of 2007, when the credit crunch began, to 17,000.

Johansson said the changes and cuts would "enable UBS to position itself as one of the core group of universal banks that are likely to dominate in this redrawn landscape."

UBS said yesterday it sees a "small profit" in the third quarter which has just ended and predicted it would be profitable overall during 2009.

Its shares rose 8% yesterday. It said that it had significantly reduced exposure to mortgage-backed securities in the US largely through selling them off. It did not reveal the extent of third-quarter writedowns.