UBS’s 9,000 staff in London are braced for more job cuts after the Swiss bank disclosed big new losses from US sub-prime mortgages and structured credit, making it the biggest credit crunch victim.

Marcel Ospel, UBS’s chairman, once fêted as the most brilliant banker in Europe, said that he was quitting as he revealed that losses had more than doubled to $37 billion (£18.6 billion). This is equivalent to three times the annual wages bill of UBS’s 80,000 staff worldwide and much larger than the next most exposed banks so far, Merrill Lynch, with $24 billion, and Citigroup, with $18 billion.

UBS has been forced into a second emergency capital-raising to shore up its balance sheet, announcing a fully underwritten SwFr15 billion (£7.5 billion) rights issue. Four months ago it raised SwFr13 billion from the Government Investment Corporation of Singapore and a Middle East investor.

Shares on both sides of the Atlantic soared as investors welcomed the UBS move to address its sub-prime issues, and Lehman Brothers successfully raising $4 billion cash. The FTSE 100 closed up nearly 3 per cent at 5,852.6, while the Dow soared 391.5 points to close at 12,654.4.

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Marcel Rohner, UBS’s chief executive, said job cuts in investment banking were planned and the extent of the cuts and other measures would be announced in the next few weeks. The investment banking division, which accounts for most London jobs, would be repositioned “according to its strengths”. He declined to comment on suggestions that the job cuts would be deeper than the 1,500 announced last October. He said: “Clearly the industry is in a very difficult environment and we have to review the capacity with which we operate in this environment.”

Jerker Johansson, the newly appointed chief executive of the investment bank, who took up his job on March 17, is understood to be sifting the options. His background is in equities. Peter Kurer, UBS’s in-house general counsel, was named successor to Mr Ospel, who will step down at the annual meeting this month. UBS shares rose more than 12 per cent on hopes that the bank could draw a line under its ill-fated foray into American sub-prime.

After the fresh sub-prime and structured credit losses of $19 billion for the first quarter, UBS estimated its group first-quarter net loss at SwFr12 billion.

The new rights issue represents a big dilution of existing shareholders. UBS plans to boost its share capital from the present SwFr207 million by up to SwFr125 million, an increase of up to 60 per cent. Details on price have yet to be decided.

In the wake of UBS’s announcement, Gordon Brown called for better daily cooperation between the world’s financial regulators and better disclosure from banks to give early warning of market turbulence. Mr Brown said that he will use talks with international leaders before next week’s G7 meeting to call on financial institutions to make prompt and full disclosure of losses. Possible remedies to deal with the crisis include a temporary suspension of capital requirements, taxpayer-funded recapitalis-ation of banks and public purchase of mortgage-backed securities.

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