Swiss banking giant UBS AG is repositioning its investment bank to focus on core businesses and, as a result, will reduce or exit the other business lines.

The investment bank will continue to build on its equities business, maintain its position in investment banking, and reposition its fixed income, currencies and commodities business around client servicing and facilitation. It will exit commodities (excluding precious metals); substantially downsize real estate and securitization and proprietary trading; and preserve its core foreign exchange, rates and credit businesses.

As a result, it will reduce net headcount by an additional 2,000, bringing staffing levels to approximately 17,000 by year-end, a reduction of around 6,000 since the peak in third quarter 2007.

“The ongoing crisis in the financial markets and dramatically changed industry dynamics require us to recalibrate our business. While the revenue outlook is uncertain, these measures will allow us to focus on our strengths, reduce the cost base to a more sustainable level and position our core businesses for growth once fundamentals improve,” says Jerker Johansson, chairman and CEO of UBS Investment Bank.

On Thursday, the overall bank said that it currently expects to report a small profit for the third quarter; and it forecast that 2009 will be an overall profitable year. UBS also stressed that it wants to maintain a strong capital base, adequate liquidity and a reduced, solid balance sheet.