Regulators are preparing the groundwork for investigation into whether UBS, the European bank worst hit by the credit crisis, has breached market disclosure regulations.

The news is the latest blow for the Swiss bank, which last week revealed that its sub-prime losses have more than doubled to $37 billion (£18.6 billion).

The Swiss Federal Banking Commission (SFBC) is preparing material on behalf of the the Swiss Exchange (SWX) and Securities and Exchange Commission (SEC) ahead of an official investigation.

A spokesman for the SFBC commented: "I can confirm that we are co-ordinating preparation for an investigation ... into whether announcements made by UBS are in line with stock exchange laws in Switzerland."

The regulators are expected to look at whether price-sensitive announcements made by the bank over the past year, including those issued last week, were disclosed in a timely fashion.

In particular, they are likely to examine whether UBS breached SWX's Ad Hoc Publicity rules which, according to its website, require listed companies to provide information to market participants "in a non-discriminatory manner and to ensure transparency and equal treatment for all investors".

UBS refused to comment on the matter. A spokesman for the SEC also refused to comment on the Swiss bank, which is listed in both Switzerland and the US.

Meanwhile, Sonntag, a Swiss Sunday newspaper, reported yesterday that the Swiss bank is preparing its investment banking business for a possible sale in the next two to three years.

UBS may be forced to sell the unit if future US laws require a separation of its business and investment banks, Sonntag said.

A sale might also be necessary if the Swiss Federal Banking Commission raises capital requirements for investment banks or if the investment bank cannot be made profitable.

The UBS spokeswoman said: “The UBS board made it clear last week that it did not plan to spin off any of its major businesses.”

Luqman Arnold, a former president of the UBS board and now a rebel shareholder, has pushed for UBS to separate its investment banking business from its wealth management operations and consider selling other parts of the company to raise capital.

His comments followed revelations by the bank that its chairman Marcel Ospel will quit in the wake of the substantial sub-prime losses.

The bank has indicated jobs will be cut, the UBS spokeswoman would not comment on a report that the bank will shed at least 2,000 jobs. Such cuts, to be made mainly in New York and London, will more than halve the bank’s fixed-income and proprietary trading divisions.

UBS is planning a SwFr15 billion (£7.4 billion) rights issue following the losses.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts