Ailing Swiss bank UBS is cutting 8,700 jobs after £1.18billion first-quarter losses but it is not known whether the axe will fall in Birmingham.

The investment giant, which agreed a Swiss government bail-out last October, will cut staff levels from the current 76,200 in 50 countries to 67,500 by 2010.

A spokesman said it is not clear whether the cutbacks will affect its offices on Colmore Row, Birmingham.

He said: “There is no breakdown at all at this stage. It is an ongoing process and we don’t comment on staff departures.”

UBS was heavily exposed to the complex mortgage-backed investments hit by the credit crunch and the latest losses reflect a further £2.3bn write-down on its toxic assets.

The new cull comes just two months after UBS said it was cutting at least 2,000 more jobs, mostly from its troubled investment banking division.

Chief executive Oswald Grubel said: “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.

“Our outlook remains cautious and we face many uncertainties.

“We have to prepare ourselves for this, even though we are entitled to be very optimistic about the longer-term prospects for our bank.” The news is a setback for the sector after better-than-expected results from US banks Goldman Sachs and Wells Fargo in recent days.

UBS is planning to make savings of up to £2.36bn to cope with the tough market conditions and lower levels of business.

The bank, which employs 7,000 staff in the United Kingdom, said the job cuts were “unfortunately unavoidable”. It will cut 2,500 jobs in Switzerland, and thousands more in the US.

Despite the latest losses, UBS said it had a tier one capital ratio – a key measure of balance-sheet strength – of around ten per cent at the end of March. But UBS also said it saw a net £4.1bn flow out of the bank during the first three months of 2009 from business customers.

This was seen mainly after it paid a fine of £525m to authorities in the Un ited States in February to settle charges of assisting alleged tax fraud by some of its US clients.

The financial crisis has already forced UBS to announce more than £33 billion of write-downs and its shares have lost nearly three-quarters of their value in the last 12 months.

The icon of Swiss banking came to the verge of collapse in October and was forced to ask the Swiss state for help.

Berne gave it a cash injection of £3.5bn and the Swiss National Bank agreed to absorb into a special fund some of UBS’ toxic assets, a sum now amounting to more than £26 billion.

Kepler Equities’ analyst Dirk Becker said: “Cost-cutting is always a sign of weakness. It means you cannot generate profit.”

The Birmingham Post revealed in August that directors of the UBS Wealth Management office oversaw a huge expansion at the Birmingham office.

It doubled its presence at Colmore Row by taking on eight staff from PricewaterhouseCoopers’ Birmingham office.