UBS AG reported a net loss of 11.5 billion Swiss francs (US$11 billion) for the first quarter of 2008, and said it plans to cut another 5,500 jobs.

The first quarter loss was in line with UBS’s pre-announcement forecasting a CHF 12 billion loss. The quarter was difficult for many reasons, the Swiss bank said. “The downward spiral in US mortgages and related instruments accelerated during first quarter and also spread to other structured credit positions. This development led to first quarter 2008 losses of around US$19 billion on these affected positions.

The quarter was also characterized by lower capital markets activity, sharply reduced mergers and acquisitions and falling securities prices, it added. During the quarter, there was also a weakening of the US dollar and the British pound against the Swiss franc, UBS’s reporting currency.

“Considering these market conditions, and with the exception of the additional losses experienced on UBS’s positions affected by the U.S. mortgage and credit market turbulence, revenue performance in most of UBS’s businesses was satisfactory,” it said.

The bank also noted that it has been successful in bringing costs down. Across the firm, variable personnel expenses were reduced in comparison with first quarter 2007 and fourth quarter 2007, despite severance costs following the investment bank’s restructuring. General and administrative expenses for all categories other than provisions fell 20% from fourth quarter 2007 and 8% from first quarter 2007. However, higher legal provisions and related legal fees offset these reductions, leading to a year-on-year increase in general and administrative expenses.

UBS said it expects the difficult environment to remain and be characterized by a continuing unfavorable global economic climate, deleveraging by institutional and private investors, slower wealth creation and lower trading and capital market activity. “The impact will affect all of UBS’s businesses and it requires the firm to manage costs, resources and capacity very actively,” it noted.

The investment bank expects to employ around 19,000 people at the end of 2008, which will require a reduction of up to 2,600, of which the large majority will be redundancies. In the other business groups, personnel numbers will be reduced mainly through natural attrition and internal redeployment, although it will not be possible to avoid redundancies entirely. Assuming no change in market conditions, UBS estimates that, by mid-2009, the firm as a whole will have about 5,500 fewer employees than today.