Zurich-based investment bank UBS has posted a CHF12.45 billion (£5.71 billion) loss for the fourth quarter on its heavy exposure to the US subprime market.
The bank had warned shareholders two weeks ago it was anticipating serious losses.
UBS also reported full-year 2007 losses of CHF4.38 billion, (£2.02 billion) as the writedowns from its US mortgage positions dragged down better performances from other divisions.
Losses related to US subprime mortgages in the fourth quarter stood at CHF15.6 billion (£7.15 billion), UBS said.
"Last year was one of the most difficult in our history," said Marcel Rohner, UBS chief executive.
"While most of our businesses continued to be very profitable, the sudden and serious deterioration in the US housing market, in combination with our large exposure in subprime mortgage-related securities and derivatives, has driven us into loss for the year."
UBS said it expected 2008 to be "another difficult year".
The bank added it has taken steps to reduce its exposure to risk, particularly in home equity-linked portfolios.
The US subprime crisis, which began with US homeowners defaulting on their loans and quickly spread to financial institutions across the world, has affected other major banks including Citigroup and BNP Paribas.
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