UBS expects to cut the amount it pays out in salaries and bonuses by about $4bn, or one-third, this year, as it adjusts its finances for a lower headcount and shrinking income from many of its core businesses.

The bank, Europe's biggest casualty of the credit crisis, attributed the decline largely to investment banking, one of its core divisions alongside private banking and asset management, where there has been a sharp fall in business in many areas.