How a slump in housing prices in poor neighborhoods in the United States has wreaked havoc on a giant Zurich bank that caters to the wealthy may be the most vivid illustration of the breadth of the subprime crisis.

Underlining its status as the biggest subprime victim still standing, UBS announced today that it was cutting 5,500 jobs, or about 7 percent of its workforce, as it recorded a loss of $17.3 billion. UBS' investment bank will bear the brunt of the axe: 2,600, or 12 percent of the workforce. Overseeing a leaner investment bank is Jerker Johansson, a longtime Morgan Stanley executive who was hired by UBS earlier this year.

Most of those cuts will be felt in London and the New York region. And there may be a sign that more cuts are on their way on Wall Street. Last month, Citigroup announced that it was eliminating 9,000 jobs worldwide after an earlier reduction of 4,000 jobs. Lehman Brothers is reducing its workforce by 5 percent, and Morgan Stanley is cutting several thousand jobs. And perhaps as many as two thirds of Bear Stearns' 14,000 employees will lose their jobs when J.P. Morgan Chase completes its takeover of the firm.

The Financial Times' Alphaville blog, however, points out that the UBS cuts are not as drastic as they appear because the bank had ramped up employment not too long ago. The investment-banking unit's employment peaked at 22,833 in the middle of last year and is currently at 21,600, so slimming down to 19,000 won't be quite so rough.

Still, the cuts come on top of earlier reductions of 1,500 announced earlier by UBS.

The bank is also planning to sell a $15 billion portfolio of securities tied to subprime mortgages to BlackRock, the U.S. money-management firm that is currently advising the Federal Reserve Bank of New York on Bear Stearns' debt assets.

The sale is being seen by UBS as a sign that perhaps the worst of the subprime crisis is over.

"We see clearly that there are sophisticated investors coming into this market, and this in itself we view as strong support," Marcel Rohner, UBS chief executive, said in a conference call with reporters, according to Reuters.

Yet this is a bank that has announced write-down after write-down on its holdings, or more than $37 billion since October. Clearly more work needs to be done.

Jeffrey Goldfarb on BreakingViews.com notes that "even after unloading $15 billion of subprime assets, UBS will be left with $17.7 billion of them, not to mention another $30 billion of monoline bond insurance, reference-linked notes, leveraged loans, and commercial real estate exposure."

Douglas McIntyre on 24/7 Wall St. says the UBS news is even more ominous: "It is beginning to dawn on the people who created the mortgage-backed securities market that the first wave of defaults on subprime loans is now being followed by a second, and perhaps larger, tranche with a huge number of adjustable-rate mortgages resetting this summer. "