updated 2/14/2008 9:31:00 AM ET 2008-02-14T14:31:00

UBS AG on Thursday posted a fourth-quarter net loss of $11.28 billion, and a loss for the entire year, besieged as other banks were by investments in U.S. subprime mortgages.

Still holding $27.59 billion in securities linked to the subprime residential mortgage market, UBS said it expects more problems in 2008.

Switzerland’s largest bank posted its first full-year net loss since 1997, when it was created out of two major Swiss lenders.

The fourth-quarter loss of 12.45 billion Swiss francs, in line with the bank’s forecast at the end of January, compared with a net profit of 3.4 billion francs in the same period of 2006.

The net loss for the full year was 4.38 billion francs ($3.97 billion), compared with a profit of 12.26 billion francs in 2006.

“Last year was one of the most difficult in our history,” said Chief Executive Marcel Rohner. “While most of our businesses continued to be very profitable, the sudden and serious deterioration in the U.S. housing market, in combination with our large exposure in subprime mortgage-related securities and derivatives, has driven us into (a) loss for the year.”

The bank added in a statement: “UBS expects 2008 to be another difficult year.”

Analysts said the assessment was unsurprising but nonetheless discouraging.

“We still think further writedowns are likely in at least the first quarter, further impairing confidence and raising the risk of market share losses,” Deutsche Bank analyst Matt Spick said.

The losses have resulted in spiraling write-downs totaling $18.4 billion so far and have forced UBS to seek 13 billion francs ($11.8 billion) in fresh capital from Singapore’s government fund and an unnamed Middle East investor.

UBS has fired a number executives, including Chief Executive Peter Wuffli, investment banking head Huw Jenkins and financial chief Clive Standish. Its shares have slumped 22 percent already this year on fears of even greater losses.

Analysts said they were reassured that UBS appears to be reducing its holdings of toxic securities. The $27.59 billion in securities revealed Thursday is down from $38.77 billion reported in September.

Net new money inflows — a closely watched gauge of future revenue — was positive thus far in 2008, Rohner said during a conference call.

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