( BBC ) - A number of big investment banks have admitted major losses caused by bad investments centred on the crisis-hit US sub-prime mortgage market.
Worst hit was Swiss bank UBS which was forced to write down losses of 4bn Swiss francs ($3.4bn; ?1.67bn).
The group said it now planned to cut 1,500 jobs and make extensive management changes.
Later, US giant Citigroup revealed its sub-prime losses would total $1.3bn, as well as $2.6bn in extra credit costs.
The news comes a fortnight after UK lender Northern Rock was forced to approach the Bank of England for short-term finance to cover the costs of running its business.
The news prompted a run on the bank and led to 80% being wiped off the value of its shares since the beginning of September.
On Monday, its shares dropped a further 15.85% to trade at 150.8 pence in late London trade on speculation that it home loan book would be sold off separately from the rest of the business - leaving its shareholders with nothing.
Meanwhile, UBS called its results, which mark the first loss for the bank in nine quarters, "unsatisfactory" and halted its share buyback programme.
BBC business editor Robert Peston said: "The mess is doubly embarrassing for UBS since it took a substantial hit in the dry-run for this summer's market mayhem, the crisis afflicting the giant hedge fund, Long Term Capital Management, in 1998.
But he added: "UBS is big enough to more than weather this storm."
Meanwhile, Credit Suisse warned it too would report lower third quarter results because of the US sub-prime credit woes.
But it will still make a profit, unlike UBS.
US bank Citigroup will also make a profit in its third quarter, but this will be a third of what it was last year - largely as a result of a $1.3bn write down sparked by US mortgage woes.
But it also confirmed a pre-tax loss of $1.4bn on loans to private equity firms, which have until now been snapping up businesses with ever more expensive price tags at a phenomenal rate.
"This is cringe-making for Citi's chief executive, Chuck Prince," said Mr Peston.
"In July, he told the FT that his bank was 'still dancing' in the private equity market, long after it was obvious that the private-equity bubble had been pricked and was deflating at an alarming rate."
As for the damage to UBS, many analysts had predicted some losses to earnings after it warned recently that weak trading would result should "turbulent conditions prevail".
But few had forecast the magnitude of the write downs.
"Today's UBS news is certainly bad news," said Claudia Meier, an analyst at Vontobel.
But she argued: "On the other side, it finally gives some more visibility to the sub-prime fears and we expect the market to like this."