UBS, the world’s largest wealth manager, will kick off the European banks’ reporting season today by unveiling third-quarter losses and delivering a warning that further writedowns are still to come.

In a surprise statement yesterday, the Swiss bank said that the fourth quarter had started well but that it was dangerous to assume that this would continue.

UBS was responding to speculation at the weekend that the bank faced a further SwFr3 billion (£1.25 billion) in writedowns in its fixed-income business, on top of the SwFr4 billion announced on October 1, because of as-yet unreported exposures to the US sub-prime mortgage market.

Shares in UBS closed flat at SwFr62.15 yesterday after the bank confirmed any pretax losses for the three months to September 30 would not be greater than the SwFr600 million to SwFr800 million that it predicted earlier this month.

UBS said yesterday: “The fourth quarter has started with good results from all businesses, including the investment bank.”

But the bank added: “The FICC [fixed income, commodities and currencies] 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 writedowns on the positions.

“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.”

Banks around the world have written down more than $20 billion (£9.7 billion) in assets since the start of the credit crunch. Deutsche Bank and Credit Suisse report their third-quar-ter figures on Wednesday and Thursday, raising the possibility of more bad news. Deutsche Bank has already indicated that it would report a hit from the global turmoil.

Japan’s biggest bank, Mitsubishi UFJ Financial Group, yesterday surprised the market with an announcement that it would have to write down the value of its sub-prime-related investments by as much as 30 billion yen (£126 million) – six times more than previously announced.

Yesterday UBS did not contradict reports that it may have to announce a further SwFr3 billion of depreciation.

On November 1 the bank wrote down SwFr4 billion in assets held by its hedge fund and mortgage-backed securities businesses.

Huw Jenkins, chairman and chief executive of UBS’s investment bank, was ousted as a result of the losses.

In a management reshuffle, Marcel Rohner, group chief executive, took control of the investment banking business. Mr Rohner replaced ousted chief executive Peter Wuffli in July.

About 1,500 workers in the UBS departments hardest hit by the closure of the credit markets will have been made redundant by Christmas.

Analysts yesterday gave a mixed reception to UBS’s disclosures. Bank Helvea maintained its “buy” recommendation on the Swiss bank’s stock, stating that business areas other than FICC have continued to perform.

But Credit Suisse kept the stock on “hold” because of the uncertainty of the outlook for UBS.

Fixed assets

— UBS operates in more than 50 countries

— The bank employs more than 80,000 people

— UBS has four businesses: wealth management, asset management, investment banking and securities and Swiss retail and corporate banking

— The bank was created in 1967 from the merger of Union Bank of Switzerland and Swiss Bank Corporation

— Last year UBS reported a net profit of SwFr 11.2 billion (£4.6 billion)

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