UBS is to cut a further 8,700 jobs, equivalent to 11 per cent of its global workforce, after Switzerland's largest bank gave warning that it would record a first-quarter loss of nearly SwFr2 billion (£1.2 billion), amid another huge investment writedown and more customer defections.

The job cuts, which will bring the total number of redundancies at the group to more than 18,000 in the past two years, will fall mainly in the wealth management and back-office operations, with most of the losses from Switzerland and the US. They will leave UBS with a global workforce of 67,500, down by almost a fifth from its peak of 83,800 a year ago.

The redundancies, together with reductions in spending on marketing, sponsorship and external consultants, are part of a plan to save SwFr4 billion annually by the end of 2010.

It is understood that only a small fraction of the positions will be lost in London, where most of the 7,000 remaining staff work in investment banking after the elimination of 2,500 positions in the past two years.

Speaking at the bank's annual meeting in Zurich, Oswald Gruebel, the former Credit Suisse chief executive who was called out of retirement in February to run UBS, said the group was in a “precarious situation” and that it would be “a long road back”.

“Markets remain extremely unstable,” he said. “That's why we are acting by rigorously adjusting the size of our bank and cutting costs significantly once again.”

Mr Gruebel said that he was reviewing the business with a view to shedding some less profitable niches and geographical areas and said the bank would give further details when it announced its 2008 figures on May 5.

Mr Gruebel said that the first-quarter loss stemmed mainly from a SwFr3.9 billion writedown, most of it relating to losses on investments in bonds and other securities. These come on top of the more than $50 billion (£33 billion) of writedowns the group has taken since the beginning of the financial crisis, forcing it to raise more than $32 billion from investors such as the Swiss Government. UBS also suffered from an exodus of clients outside its US business, although this was largely offset by an influx into its American wealth management arm.

Investors pulled SwFr23 billion out of its wealth management and Swiss bank division, which excludes North and South America, in the first quarter. However, this was largely offset by a SwFr16 billion net inflow into its so-called Wealth Management Americas business after the bank hired about 400 brokers in the US, who brought many of their clients with them.

Mr Gruebel told the 5,000 UBS investors at the shareholders' meeting: “Unfortunately, I am not able, as yet, to offer you any good news. Instead, I am forced to present you with another round of unsatisfactory performance figures and to announce further drastic measures.”

UBS is among the biggest job cutters in the banking world, in percentage terms, announcing reductions of about 20 per cent of its workforce since the start of 2008. The others are Citigroup, which has shed 75,000 positions globally, or 20 per cent, and Royal Bank of Scotland, which has eliminated 15,000 jobs, or 8.82 per cent.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive