UBS, the world's biggest money manager, gave warning that the credit crunch could force it to make further writedowns, despite the fourth quarter getting off to a relatively healthy start.

The Swiss-American bank, Europe's largest by assets, said that it remained exposed to a further slide in the US housing and mortgage securities markets. It said it was making no assumptions that the situation would resolve itself in the short term.

In a statement to investors just a day ahead of an expected big loss for the third quarter, UBS rebuffed reports that it writedowns would be worse than expected.

However, it said its fixed income, currencies and commodities (FICC) unit was not out of the woods yet, despite a healthy performance at its investment bank since the beginning of the month.

UBS said: “The FICC business remains exposed to further deterioration in the US housing and mortgage markets as well as rating downgrades for mortgage-related securities, which could lead to further write-downs on the positions.

“As a result, UBS is not assuming that the quarter will continue as positively as it has begun, or that the current difficulties will be resolved in the short term,” it said.

UBS shares rose 0.9 per cent to €62.55.

The statement, issued ahead of the bank’s third quarter results tomorrow, was made in response to a Swiss newspaper report over the weekend which speculated that UBS would report bigger third-quarter losses than the SFr800m ($688m) it previously guided.

The bank said: “Although UBS will release quarterly results tomorrow, it would like to re-confirm that it will report an overall group loss that is within the range of SFr600 million to SFr800 million ($516m-$688m) given in the announcement on October 1.”

UBS is one of three of Europe’s biggest investment banks this week expected to reveal the full impact of the American sub-prime loan crisis that is now causing waves on this side of the Atlantic.

Deutsche Bank and Credit Suisse are also all expected to announce big write-downs following the shock $7.9 billion (£3.8 billion) losses announced by Merrill Lynch last week.

At the beginning of the month, Deutsche Bank said profits would be up, despite likely write-down charges of €2.2 billion (£1.5 billion) on leverage-loan commitments.

Credit Suisse is expected to have fared best, having had less exposure to collateralised debt obligations and sub-prime lending.

The revelation of Merrill’s writedown has resulted in strong speculation that the bank’s chief executive, Stan O’Neal, is preparing to resign. Confirmation of this is expected this afternoon.

Meanwhile, Bank of America is cutting 3,000 jobs, mainly from its investment bank.

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