UBS has been hit hard from the US mortgage meltdown

It made a full-year loss of 4.4bn Swiss Francs ($4bn; �2.02bn) in the 12 months to the end of December, compared with a 12.2bn net profit in 2006.

UBS unveiled a new $4bn writedown on investments linked to sub-prime loans, taking its total writedowns to $18.4bn.

The US sub-prime problems have hit the balance sheets of banks worldwide.

The annual loss was the first since UBS was created from the merger of Union Bank of Switzerland and Swiss Bank Corporation in 1998.

The announcement came two weeks before the Zurich-based firm was scheduled to report earnings. It said it would provide further details of its financial performance on 14 February.

Deep problems

UBS has suffered from investments linked to US sub-prime mortgages, which were lent to US homebuyers on low incomes or with patchy credit ratings.

These investments quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults.

UBS had warned that it could make a loss for 2007 depending on its performance in the last three months of the year.

It has estimated that it made a net loss during this quarter of 12.5bn Swiss Francs - far worse than many analysts had expected.

The firm is now struggling to restructure its investment banking division to reduce risk and repair its damaged reputation, and it has sought funds from Singapore and the Middle East.