Substantial fourth quarter sub-prime write-downs could damage UBS’ wealth management business by taking the Swiss bank’s tier 1 capital below the psychologically sensitive level of 10 per cent, according to analysts quoted on Reuters.

The report quotes a CIBC note which said: "While we have already estimated that UBS will write down roughly SFr2 billion ($1.8 billion) in the fourth quarter, we now estimate that over the course of 2008, the company will mark down an additional SFr6 billion."

And research from CreditSights indicated that UBS may be required to make $9 billion in further writedowns, although its models do not take account possible hedges may have taken out by UBS so this is likely to be an over-estimate.

"If they go through this next year they are in deep trouble, and keeping tier 1 capital above 10 per cent is what is expected from a wealth manager," an un-named London-based analyst with a US investment bank told Reuters.

"By keeping tier 1 high you get a good credit rating, and that means you are seen by very demanding clients as a very creditworthy counterparty, and that will attract very wealthy clients, and that is where UBS is making most money," said Dirk Becker, a Frankfurt-based analyst at Kepler Securities.

The CIBC note said that UBS had drawn a line in the sand of 9 per cent for its tier 1 capital ratio as below this level alarm bells are set off at the regulators.