Mumbai: Swiss banking giant UBS, hit by $11.4 billion (12.5 billion Swiss francs) fourth-quarter write-downs on the back of the US subprime mortgage crisis, said it would take a $3.5 billion (SFr4.4 billion, 2.75 billion euros) full-year loss for 2007.

It had reported a third quarter loss of $713 million (See: UBS reports a $713 million third quarter loss after subprime write-downs)

In December, UBS AG, Europe's largest investment bank by assets, had signalled fourth-quarter subprime write-downs of $10 billion, stemming from additional losses on its portfolios and weak trading in its fixed income, currencies and commodities division.

The Zurich-based bank raised write-downs directly linked to the subprime mortages to about $12 billion from the $10 billion and said an additional $2 billion of write-downs are likely for other US residential mortgage securities.

UBS attributed the losses to `weak'' debt-trading revenue and the sale of securities at a loss to cut risky assets.

Analysts estimate UBS's total 2007 write-downs on its US mortgage-related securities, including $4 billion of write-downs reported in the third quarter, at $18 billion.

UBS held more than $40 billion in subprime-related paper through positions taken by Dillon Read Capital Management, its now-closed internal hedge fund, and its conventional fixed-income trading activities.

UBS was forced to sell SFr13 billion in shares to Singaporean and Saudi Arabian investors to maintain its Tier I capital ratio - a key measure of its financial strength -, which amounted to 8.8 per cent at the end of December. (See: UBS to write down $10 billion, raise $11.5 billion in stake sale) 

The 8.8 per cent level, which is well below the bank's target ratio of 11-12 per cent, did not include additional financing from the sovereign wealth funds, explaining its concern to raise the extra capital.

UBS is scheduled to announce its annual results for 2007 on February 14.