UBS AG plans to cut 5,500 jobs after reporting a loss of $10.9 billion for fourth quarter. The banking services major plans to lay-off seven percent of its current workforce. The bank had to write-down $38 billion in the subprime mortgages.

UBS is also in talks with BlackRock Inc. to sell its municipal bonds business. BlackRock Inc. has also shown interest in buying $20 billion of subprime assets of the bank. The deal may be finalized at 25% discount to its value.

In Swiss stock markets, UBS stock lost over 5.5%.

CEO Marcel Rohner said that the worst seems to be over but they still expect tough business conditions going ahead. He further added that the turnaround has already begun.

Another major UK based bank Lloyds TSB has written-down $760 million investments. Banking majors are facing tough times since the first news of subprime mortgage crisis broke in summer last year.