Zurich – The Swiss banking giant UBS said Wednesday it will take a first-quarter loss of almost 2 billion Swiss francs (1.7 billion dollars) and will cut 8,700 jobs worldwide by 2010.

“Unfortunately I am not able, as yet, to offer you any good news,” Oswald Grubel, chief executive officer of the UBS Group, told shareholders at the annual meeting while pledging to return to profitability.

The crisis, he said, “was not over,” and would likely lead UBS to being a smaller bank. Previously at the UBS rival Credit Suisse, Grubel took over his role in February.

Addressing the crisis of confidence which has hit the financial sector as a whole, and the bank specifically, Grubel said that “trust is something that is quickly lost, while winning it back is a long and demanding process.”

Peter Kurer, who took over as chairman a year ago while UBS was already in trouble, made his final address to shareholders and stepped down to be replaced by Kaspar Villiger, a former Swiss finance minister. The move was announced last month.

The group’s stock on the Zurich exchange was down about 6 per cent, standing at around 12.50 francs, in late afternoon trading, having recovered slightly from earlier declines.

Most of the new losses for the first-quarter were in further writedowns and cash outflows in its wealth management divisions. The quarterly report would be made public on May 5.

The bank was to close this quarter announcing an overall outflow, despite positive net inflows of 16 billion francs in its onshore management business in the United States.

It took new writedowns worth 3.9 billion Swiss francs, more than had been expected.

Analysts at Helvea wrote in a note that the writedowns “were not beyond the realms of the possible and hopefully will mark the end of this sad story.”

The analysts said that outflows and writedowns, coupled with the job cuts, were “disappointing” but expressed hope for the new management, which was expected to focus on retaining clients’ money and attracting new wealth.

To save between 3.5 and 4 billion francs next year, UBS said it would reduce its staff from 76,200 to 67,500. Up to 1,500 layoffs would be in its home base in Switzerland.

Grubel also said he would cut benefits at the management level.

In 2008, the bank took losses of over 20 billion francs and has already announced over 11,000 job cuts in the last year.

Commenting on the worldwide increased government involvement in the financial sector, Grubel said “the banks themselves, including UBS, have only themselves to blame.”

UBS suffered more writedowns than any other bank in Europe and had to take cash injections from the state and move illiquid assets to a stabilization fund set up as by the government and central bank.

It took large losses on risky investments, partially in the United States housing market, writing down some 50 billion dollars in assets.

The bank said it would continue to reduce risks and focus on its core wealth management business. UBS is considered to be the world’s largest manager of wealth.

UBS is also entangled in a legal battle in the US over tax fraud allegations. It paid 780 million dollars in fines and handed over data on some clients, in spite of Swiss banking secrecy, to the authorities there, as part of a settlement.

One US client has since pleaded guilty to charges of tax fraud and another is expected to do so soon.

The US authorities still want information on some 52,000 more clients.

Switzerland last month agreed to relax its banking secrecy laws and would enter into bilateral negotiations on its tax agreements with other countries, including Japan and the US.

UBS officials took partial responsibility for the ongoing changes to the Swiss political system.(dpa)