Marcel Ospel, chairman of Swiss banking giant UBS, today became Europe's biggest casualty of the credit crunch after he fell on his sword as the bank announced another £9.6 billion of subprime writedowns and a £7.6 billion rights issue.

The bank said it will cut more jobs, particularly at UBS investment banking headquarters London's Broadgate, where hundreds of bankers have already lost their jobs.

Ospel, who has been at the top of the bank for the last decade, announced he would not stand for re-election at next month's shareholder meeting: "I have always stated that I ultimately take responsibility for the bank's situation."

Today's writedown of £9.6 billion on US real estate and related structured credit products is even bigger than the £9.3 billion UBS announced for the whole of 2007, indicating that the credit crunch is getting worse not better.

The rights issue follows the £6.6 billion emergency capital injection by the Singapore government and an unnamed Middle East investor in February. The issue has been underwritten by JPMorgan, Morgan Stanley, BNP Paribas and Goldman Sachs.

UBS said that it estimated it lost £6 billion in the first three months of this year, almost three times as much as the total it lost in the whole of last year.

It also said it will put its subprime assets into a separate "work-out portfolio" which it hopes to sell on. But for the time being, chief executive Marcel Rohner said: "The environment remains difficult, and while we are committed to further substantially reducing our exposures we do not want to undertake sales of positions at severely distressed levels."

Ospel, the architect of the merger of SBC first with SG Warburg in London and then with Union Bank of Switzerland, had already taken a 90% pay-cut after last year's disastrous results. In 2006, he was paid 26.6 million Swiss francs (£13.4 million), but last year this was slashed to just 2.57 million Swiss francs £1.3 million).

Last summer Ospel, 58, indicated he would remain as chairman for another three years after the ousting of then chief executive Peter Wuffli after large losses at its Dillon Read Capital Management hedge fund. But he recently revised that to just a further year.

Ospel will be replaced as chairman by lawyer Peter Kurer, who has been UBS general counsel since 2001.

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Although on the surface, the news from UBS and Deutsche looked horrific, shares in banks across Europe jumped.

Analysts said this was because investors were now hoping the worst might be over in the flood of writedowns from Europe's banks.

Meanwhile, the UBS capital increase was greeted with relief, firstly because it showed there were still investors prepared to back the stricken bank, and secondly because it significantly improves its financial foundation.

"We can imagine the worst may be behind us," said Nathalie Pelras, fund manager at Richelieu Finance in Paris.