Swiss bank UBS is expected to warn on Monday that it has written off billions of dollars on fixed-income assets, making it the biggest casualty so far of turmoil in world credit markets, the Financial Times and Wall Street Journal reported.

Citing people familiar with the matter, the FT said UBS was expected to say it has written down its fixed-income portfolio by more than 3 billion Swiss francs ($2.6 billion), triggering a third-quarter loss of at least 600 million Swiss francs ($516 million).

The Wall Street Journal reported UBS was projecting a third-quarter loss of 600 million to 700 million Swiss francs ($510 million to $600 million) based on a writedown of 3 billion to 4 billion Swiss francs.

The bank will report the fixed-income loss on Monday, ahead of its third-quarter results which are due October 30, according to the Journal. UBS told investors in August that the third quarter would be difficult if credit markets continued to struggle.

The bank's losses resulted from applying sharply lower market values to asset-backed bonds, after it took a conservative view, the Journal said, citing people close to the matter.

The losses, which far exceed those reported so far by other investment banks, are expected to trigger the departure of Huw Jenkins, who runs UBS's investment banking business, the FT said on its Web site.

The bank earlier this year ousted its chief executive, Peter Wuffli, amid dissatisfaction over his handling of the bank's in-house hedge fund, Dillon Read Capital Management. Investors have grown increasingly concerned that more banks might announce losses related to credit problems as they closed their books on a tumultuous third quarter. Persistent worries about the health of the banking system have weighed on financial markets around the world.

A meltdown in the U.S. subprime mortgage market, sparked by growing defaults on riskier loans, has created a squeeze in credit markets around the world. Despite signs in recent weeks that the credit tightness may be easing, some banks continue to report they are struggling to find cash on wholesale lending markets.

The FT report did not specify what type of fixed-income assets UBS was writing off. News of UBS's losses was first reported by the Wall Street Journal.

(Additional reporting by Michael Flaherty in New York)