Citigroup warned today that its third-quarter earnings would tumble 60 percent from a year ago because of the crisis in the credit markets. The bank is taking some $3 billion in write-downs.

Citigroup's announcement is the most startling disclosure yet of damage as a result of the crisis of confidence that paralyzed the credit markets this summer after the subprime mortgage market blew up.

Firms with hedge funds that bet heavily on securities tied to subprime mortgages, such as Bear Stearns and UBS, were expected to take a hit as a result. But subprime-related damage to a diverse global money-center giant like Citigroup is certain to unnerve investors today.

"Our expected third-quarter results are a clear disappointment," Charles Prince, the chief executive of Citigroup said. "The decline in income was driven primarily by weak performance in fixed-income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs." The bank also pushed up its third-quarter earnings report to October 15 from October 19.

The bank said it would write down $1.4 billion on leveraged loans for deals. Citigroup also  had losses of $1.3 billion on securities tied to subprime mortgages. And it had a further $600 million in losses in fixed-income trading because of the turmoil in the credit markets.

Earlier today, UBS, Europe's biggest bank and the world's largest asset manager, said it would write down $3.4 billion on its fixed-income portfolio "mainly related to deteriorating conditions in the U.S. subprime residential mortgage market."

As a result, UBS says it expects to report third-quarter loss of 600 million to 800 million Swiss francs , its first quarterly loss since 1998, when it was forced to write off its investment in the hedge fund Long-Term Capital Management.

UBS is also cutting 1,500 jobs in its investment bank, or about 7 percent of the staff. The head of the investment bank, Huw Jenkins, will step down and become an adviser. UBS' chief financial officer, Clive Standish, will retire.

The moves at UBS comes just two months after a shakeup that ousted Peter Wuffli as chief executive after the bank was forced to shutdown an internal hedge fund. Marcel Rohner became chief executive.

The announcements by Citigroup and UBS will weigh heavily on investors who thought the worst had passed. While Bear Stearns had reported a 61 percent decline in third-quarter earnings, Goldman Sachs had stellar results and even made money on mortgage securities.

But Goldman now clearly appears to be the exception. More banks may be reporting losses tied to credit problems as they prepare to report third-quarter results.