Switzerland's biggest bank is expected to make the cuts across the firm globally, but the bulk of the losses are likely to occur in its hard-hit trading and investment banking areas.

The cuts will accompany a restructuring that will lop off much of UBS' massive fixed-income operations into a separate unit to be wound down over time, according to the Financial Times, which first reported the news.

That unit is expected to be led by Carsten Kengeter, a co-head of the investment bank, the paper said.

Andrea Orcel, who joined from Bank of America (BAC.N) this year to work alongside Kengeter in restructuring the trading activities, will run the equities, fixed income, foreign exchange and advisory businesses that will remain active, the paper said.

UBS pledged last year to cut more than 5 percent of its workforce, or about 3,500 jobs. The new cuts are expected to supplement that target, the paper said.

UBS, which has more than 60,000 employees, is likely to provide details of the cutbacks when it reports its third-quarter results on October 30, the source said.

The moves are being engineered by Sergio Ermotti, the 52-year-old chief executive who took the top job just 13 months ago. The bank has been withdrawing from the riskier and more capital-intensive parts of its business to meet tighter capital rules and a dearth of deals affecting the securities industry globally. It has said it will dedicate most of its resources to its wealth management, private banking and asset management businesses.

The expected cuts will add to the tens of thousands of jobs the financial sector has shed globally since the crisis of 2008. In the United States alone, financial companies have announced plans to eliminate 28,000 jobs through the first nine months of this year, according to outplacement firm Challenger, Gray & Christmas. That compared with 54,000 job losses through the first nine months of 2011.

"I think we are still in the early innings of this," said Nancy Bush, a veteran bank analyst and contributing editor at SNL Financial. "The whole structure of the financial services industry has got to change. We are in the meat cleaver stage right now."

BANKS RETRENCH

UBS is following on the heels of other financial companies worldwide that have been retrenching, as they struggle to reduce expenses amid a weak economy, new regulations and reduced trading activity.

Credit Suisse Group AG (CSGN.VX), UBS' largest Swiss rival, said this week that "repeated shocks" in the global economy has led it to increase its cost-cutting efforts by 1 billion Swiss francs ($1.1 billion) en route to reaching 4 billion francs of expense savings by 2015.

Credit Suisse, which has cut about 7 percent of its workforce since 2011, said more employees will lose their jobs as a result of the new target.

UBS has had more than its share of crises in the past few years, suffering billions of dollars in trading losses, management mishaps and scandals since the financial crisis.

Ermotti replaced Oswald Gruebel, a former Credit Suisse executive who was tasked with strengthening the bank's risk controls following a $50 billion loss at the start of the crisis and allegations of creating tax-avoidance schemes.

Those plans were shattered in September 2011, when a UBS trader was arrested and later charged by London police for allegedly hiding up to $2.3 billion of losses.

On Friday, the London-based trader, Kweku Adoboli, tearfully said in court that his trading was intended to benefit the bank.

(Reporting by Jed Horowitz, Rick Rothacker, Lauren Tara LaCapra and Paritosh Bansal; Editing by Dan Grebler)

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