The new chief executive of UBS signalled today that he was prepared to shear back the Swiss giant's investment banking arm to a fraction of its present size, adding to the job cuts the troubled group has already announced.

Speaking before the Swiss bank's annual meeting (AGM), Marcel Rohner, said that he expected to announce details of the redundancies next month, possibly accompanying first-quarter results on May 6.

The bank has already announced plans to eliminate 1,500 jobs.

Mr Rohner told shareholders that the investment bank would no longer be able use UBS's profitable wealth management arm to refinance its business, effectively cutting its lifeline.

Mr Rohner said: "Surpluses from the wealth management business will be returned to shareholders."

He added: "The capital required by the investment bank for future growth must be generated under its own steam."

The move raises question marks about UBS's commitment to corporate finance and equities, where the investment bank traditionally competes with the largest of the US-owned global invetment banks.

Mr Rohner added: "We are not going to offer everything for everyone in investment banking in future.”

The bank's AGM is expected to be a stormy meeting, as the board battles with rebel shareholders, including Luqman Arnold, of Olivant, to secure Peter Kurer, its in-house lawyer, as chairman.

Mr Kurer has been elected chairman after Marcel Ospel was ousted when UBS ran up $37.4 billion (£18.9 billion) in writedowns on assets linked to sub-prime mortgages.

However, Mr Arnold contends that Mr Kurer is not up to the job of managing an organisation of 85,000 people.

The bank will also seek shareholder approval for a SwFr15 billion (£7.5 billion) rights issue to boost its balance sheet after a SwFr13 billion cash injection from the Government of Singapore Investment Corporation (GIC) and an unnamed Middle East investor.

Mr Rohner today conceded that the bank’s management had made errors in its handling of the sub-prime market crisis but insisted that it was able to avoid repeating those mistakes.

He added, however, that UBS was still holding some risk positions whose valuations are at a very low level and in some cases below the holdings’ internal value.

In a 50-page report this week submitted to banking regulators UBS blamed poor risk control and a narrow focus on revenue growth for its troubles.

HSH Nordbank, the German regional bank, is suing UBS in the American courts for at least $275 million over the sale of financial products that collapsed as a result of the meltdown in sub-prime mortgages in the United States.

In a letter of claim sent before formal court proceedings start, HSH Nordbank claimed that UBS bankers dumped $500 million of "toxic" sub-prime mortgage securities on a client to boost revenues and secure "their extraordinary bonus payments".

HSH accuses UBS of putting risky American mortgages instead of low-risk assets into collateralised debt obligations that it sold to the German bank in 2002.