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Investment banking operations in property, securitisation and propriety trading are likely to be the hardest hit, following the banks huge asset write-downs of £23.8bn ($42.5bn) from the global credit crisis.

Jerker Johansson, chairman and chief executive officer at UBS Investment Bank, said the business has been hit considerably by the ongoing volatility in the financial markets, resulting in a need for the business to diversify.

He explained: "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."

The headcount reduction will bring the total reduction in staff numbers to 6,000 since the third quarter of 2007 when levels were at their highest.

It comes just one day after the business announced it had only marginally managed to make a profit in the third quarter of the year at its EGM in Basel, Switzerland.

The bank's investment division will now concentrate on building its equities business by seeking further 'efficiency gains' and repositioning its fixed income, currencies and commodities businesses around the world.