UBS has significantly increased its estimate of huge fourth-quarter losses from the American sub-prime mortgage crisis, further increasing the pressure on Marcel Ospel, its chairman.

The Swiss bank said yesterday that its quarterly losses from the sub-prime crash would be $14 billion (£7 billion), $4 billion more than the figure given a month earlier. Although UBS's total $18.4 billion of sub-prime losses so far are not as large as those of Citigroup or Merrill Lynch, they are the biggest among any of the European banks.

UBS said that the increased sub-prime damage, of which $2 billion related to insurance policies taken out on its bond portfolio that are now deemed to be worthless, would leave it with a total loss across all its activites for the quarter of SwFr12.5 billion (£5.7 billion). The scale of the slump is such, it said, that it will make a loss of about SwFr4.4 billion for the year, a figure that may be confirmed when it announces its results on February 14.

To make matters worse, UBS revealed that it still owned about $29 billion of bonds and other investments backed by sub-prime mortgages, leaving scope for further writedowns in addition to the $18.4 billion that it has lost so far.

The pressure on Mr Ospel has been growing since the sub-prime chaos emerged last year, but he has resisted calls to step down, although he said towards the end of last year that he did not want or expect a bonus for his work in 2007. “I myself am committed to being part of the solution,” he said in December. “[My departure] is not even being discussed.”

Meredith Whitney, an analyst for CIBC Capital Markets, said yesterday: “This writedown is the latest reason over the last two years why Marcel Ospel should step down as chairman, but he has a stranglehold over the board and so it won't happen, even though some shareholders want it.”

The $2 billion insurance-related charge that UBS took yesterday provides further evidence that the woes of the bond insurers - firms such as MBIA and Ambac, which face such huge claims as a result of the jump in defaults on the bonds' underlying home loans that they may not honour all the expected payouts - could feed through into further rounds of multibillion-dollar writedowns at the Wall Street giants that own many of the most high-risk mortgage bonds. Merrill Lynch and Citigroup became the first Wall Street banks to announce substantial insurance-related writedowns last month - both have recorded about $24 billion of sub-prime related writedowns in the third and fourth quarters - and other groups are expected to follow.

UBS's additional losses were announced as BNP Paribas, France's largest bank, yesterday reported a 42 per cent decline in its fourth-quarter profit after a €589 million (£439 million) writedown related to the credit crunch.

In addition, rumours were swirling that Mizuho Financial Group, of Japan, could suffer sub-prime related losses of 250 billion yen (£1.2 billion) for the year ending in March, an increase on the Y170 billion forecast at the end of September.

Also yesterday, Merrill Lynch announced plans to exit the business of underwriting so-called collateralised debt obligations (CDOs), the highly complex and opaque pools of bonds and other asset-backed securities that are responsible for the lion's share of Wall Street's $135 billion of mortgage investment losses.

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