Swiss banking firm UBS has become the latest bank to cut thousands of jobs around the world

Swiss banking firm UBS has become the latest bank to cut thousands of jobs around the world, although Britain will escape the brunt of the cuts.

Zürich-based UBS, which employs 65,000 people worldwide, said on Tuesday it was cutting 3,500 jobs, with the investment banking and wealth management divisions bearing the burden. The cuts were less than the 5,000 initially feared when the bank hinted at reductions last month.

The company employs 6,700 people in Britain. Most work in investment banking in London and it is thought this division will see about 300 job losses. UBS recently threatened to leave London if the Broadgate estate in the City, where it is building a £850m headquarters, was listed. Culture secretary Jeremy Hunt ignored a recommendation from English Heritage seeking to list the 1980s complex. Construction is due to start soon, and the bank is planning to move in 2016.

The latest cuts bring total job cuts announced by the 50 largest banks around the world this year to almost 60,000, according to Bloomberg data. This is the worst wave of redundancies since the financial crisis started in 2008. Swiss rival Credit Suisse is laying off 2,000 people, or 4% of its workforce. In Britain, Royal Bank of Scotland has shed 2,000 staff, HSBC 30,000, Barclays 3,000 and Lloyds Banking Group 15,000.

Investment banking will be worst affected by the UBS cuts, where 1,600 jobs will go worldwide. Another 1,200 jobs will be lost at its European wealth management arm, 350 in global asset management and 175 in its wealth management Americas division.

The cuts, which will involve redundancies as well as natural attrition (not filling posts when people leave voluntarily), is expected to save 2bn Swiss francs (£1.5bn) by the end of 2013. Hit by the strong franc and the economic downturn, UBS is battling to stay profitable. The Swiss currency has been hitting record highs against the dollar and the euro in recent weeks as the eurozone debt crisis deepened.

Chief executive Oswald Grübel has also blamed higher regulatory costs: the Basel III rules require banks to hold more capital. He has criticised George Osborne's bank levy, which could reduce the investment banking arm's profit by 100m francs in the second half.

Global recession fears have led to increased risk aversion and lower client activity at UBS. The bank was forced to ditch its Sfr15bn profit target this year after reporting a big drop in second-quarter profits in July.

"UBS realised that despite expansion after the credit crisis they lost market share everywhere, and in investment banking they won't get back to where they once were," Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets, told Bloomberg. "UBS will probably drop out from the bulge-bracket investment banks sooner or later."

UBS already laid off 18,500 people during the credit crunch. It was one of the worst affected banks, taking more than £35bn of writedowns and credit losses and suffering the biggest loss in Swiss corporate history in 2008.

"UBS will continue to be vigilant in managing its cost base while remaining committed to investing in growth areas," the bank said in a statement. It expects to book restructuring charges of 550m francs, including 450m francs in the second half of this year.