US sub-prime exposure leads to UBS'' first loss in over two years

Swiss wealth manager UBS has disclosed that it would have to write-off down losses totalling $3.4 billion due to investments in the US sub prime home mortgage industry, that would see its third-quarter earnings slump by between $700 million and $930 million.

UBS also said it would cut 1,500 jobs and make extensive management changes in response to its first loss in nine quarters.

The banker''s announcement is likely to reignite fears over the sub prime mortgage crisis enveloping the wider economy on account of the investment by banks and institutions like hedge funds in bundled debt with large components of risky sub-prime debt.

Such loans have seen record defaults due to rising interests in home loans in the US.