UBS (UBS) expects to post a loss of almost $1.75bn (CHF 2bn) in Q109 and to cut its head count by approximately 11%, according to early reports released Wednesday. The exact source of these losses are elusive, yet contribute to the darkening banking market across the pond. "The loss stems from a negative contribution totaling roughly CHF 3.9bn due to losses on previously disclosed illiquid risk positions, credit loss expenses and valuation adjustments on the last positions transferred to a fund controlled by the Swiss National Bank," UBS officials said in a media release. Early reports out of UBS clearly stated, however, expected losses are heavy and cutbacks are inevitable. "UBS seeks to realize substantial cost savings in all areas," company officials said. "Major job cuts are unfortunately unavoidable." The company said it plans to cut its employee count by 11.4%, from 76,200 as of March 2009 to about 67,500 in 2010. UBS, which employs people in more than 50 countries worldwide, said "some of these job cuts will be in Switzerland." A UBS spokesperson could not comment on the geographic breakdown of the job cuts at the time this story was published. "We know where we have to set to work," said UBS Group CEO Oswald Grübel. "It will be a long road back to success without any quick fixes. Rather, we will move forward step by step in a rigorous and disciplined manner." Grübel is no stranger to the Swiss banking system, where recent market turmoil is dictating large amounts of personnel shifting. Grübel had officially retired from his position at Credit Suisse Group in '07 after serving four years in executive positions. "My time as [CEO] has been very satisfying with the transformation of Credit Suisse into a global integrated bank under a single brand," he said in a statement dated Feb. 15, 2007. UBS persuaded Grübel back into the market two years later after former CEO Marcel Rohner resigned. UBS chairman Peter Kurer in a February '09 press statement said "Grübel brings the ideal skill set to recreate value, together with our management team, for our shareholders and clients. He will also be adept in balancing our focus on prudent risk taking and client confidence, and our goal to position UBS for future success.” The hefty quarterly loss expected, combined with the substantial head count reduction coming in the next months would suggest Grübel has not been able to stem the tide of red ink out of UBS. The news comes in stark contrast to the rosier earnings projections by U.S. banks that received capital aid from the Treasury Department through the Troubled Asset Relief Program. Goldman Sachs Group (GS) on Monday posted net earnings of $1.81bn — or $3.39 per share — for Q109, up considerably from the $4.97 per share net loss reported in Q408. Strong mortgage performance drove the gain, according to Goldman's earnings statement. Wells Fargo & Co. (WFC) said last week it expects to post a record net income of $3 bn — or 55 cents per share — in its Q109 earnings statement, which is due out April 22. The expected gain would come after accounting for $372 million in dividends paid to the Treasury on its TARP capital investment. Foreign banks operating in U.S., however, see little of the TARP's relief, an issue not isolated to the Swiss banking sector. British banks in particular have seen stocks slip in response to the global banking woes. Barclays PLC turned down government funding through the Special Liquidity Scheme (SLS) -- sort of the British version of TARP -- and instead opted for a rights issuance, indicating the bank's strength outside of government aid. Standard Chartered Bank's minimal presence in the news creates the same effect, as does Lloyd's Banking Group's recent nationalization by the British government. Although these major British banks may appear stable, all three saw their stocks dip on news of UBS' announcement, indicating British banks are not immune to the plagues of the European banking sector. UBS' expected losses -- and the response of the British banks' stocks -- paint a very worrying picture of the European banking sector as a whole, despite numerous government attempts to bolster liquidity. Write to Diana Golobay at diana.golobay@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.