Swiss banking and wealth management giant UBS reported a net loss of SFr11.535 billion ($10.96 billion) in the first quarter of 2008 - in line with earlier announcements - and said it would cut up to 5,500 jobs as a result of the credit crunch. The Q1 loss contrasts with a net profit of SFr3.031 billion in the first quarter of 2007, the bank said. The Zurich-based bank said it expected to reduce 5,500 jobs - about 7 per cent of its total payroll - by the middle of next year. UBS, as previously announced, said it is to recapitalise its depleted finances with a rights issue. It said the ex-date and start of the rights trading period will be 27 May, ending 9 June. New shares will start trading on 13 June. Meanwhile, the US investment house BlackRock is in talks to form a fund to help UBS recover from a total of $37 billion of sub-prime mortgage-related write-downs, unnamed sources have told Bloomberg. BlackRock, the manager of almost $1.4 trillion of assets, is seeking cash from investors to create a new entity that would hold and eventually sell the mortgage assets of UBS as the markets recover. New York-based BlackRock is targeting returns of more than 15 per cent, the sources said. The talks may not lead to an agreement, however, they said. Elsewhere in its results statement on Tuesday, UBS said that on the wealth and asset management businesses and among its Swiss business banking arm, its profit levels remained high in absolute terms despite a reduction in comparison with the prior quarter. There was a 13 per cent quarter-on-quarter decrease in invested assets, and therefore asset-based fee income, primarily caused by to the strengthening of the Swiss franc against the major currencies in which many invested assets are denominated: the dollar, euro and sterling. Weaker equity markets also cut into assets. On the investment banking side, which bore the main brunt of the credit crunch, revenues generated by the advisory and capital markets businesses fell by more than 40 per cent from a year before as global dealing volumes shrank. Across the firm, variable personnel expenses were reduced in comparison with first quarter 2007 and fourth quarter 2007, despite severance costs following the investment bank's restructuring. Marcel Rohner, UBS chief executive officer, said in a statement: "We can see tangible effects as a result of our initial responses to the losses. While our exposure is still subject to swings in market conditions, we see market demand for these securities returning in certain areas and at the current level of valuations." In its outlook, UBS said its investment bank arm expects to employ around 19,000 people at the end of 2008, requiring a cut of up to 2,600, of which the large majority will be redundancies. Assuming no change in market conditions, UBS estimated that, by the middle of 2009, the firm as a whole will have about 5,500 fewer employees than currently. UBS said it suffered net new money outflows of SFr12.8 billion, compared with net inflows of SFr52.8 billion in first quarter 2007. In its global wealth management businesses, however, the bank logged net new money inflows of SFr 5.6 billion in first quarter 2008.