GENEVA (AP) — UBS AG, one of the hardest hit banks in the sub-prime mortgage crisis, said yesterday that it lost 358 Swiss francs ($331 million) in the second quarter as it took another $5.1 billion hit in write-downs.

The net loss for Switzerland's largest bank in the April-June period compared with a profit of 5.5 billion francs a year earlier, while the write-offs on dwindled assets brought the total for the past year to $42.5 billion.

The bank proposed four new board members to as part of its plan to strengthen oversight of management and warned that the early feeling that the worst of the sub-prime crisis was over turned out to be illusory.

"The positive sentiment seen at the end of first quarter 2008 that the credit crisis may be easing was short-lived as trading conditions deteriorated significantly in the second half of May, in particular for assets related to US residential real estate as well as other structured credit positions," a bank statement said.

The new results come on top of write-downs totalling S$37.4 billion over the previous nine months.

UBS shares closed down 2.42 percent at 22.62 francs ($20.92) on the Zurich exchange.

Chief executive Marcel Rohner told reporters that UBS had been losing market share as a result of its performance in the market turbulence.

The bank said it had net new money outflows during the quarter of 43.8 billion francs (US$40.5 billion), compared with inflows of 34 billion francs in the second quarter 2007, indicating some customers were pulling out funds and looking elsewhere.

"This occurred in the context of continuing credit market turbulence and its impact on the firm's operating performance and reputation," the statement said.

It said that at the end of the quarter total invested assets stood at 2.8 trillion francs billion ($2.6 trillion), 15 percent down from the 3.3 trillion francs invested in the same quarter a year earlier. The bank said its staff declined by 2,387 people to a total of 81,452 during the quarter, with most of the reduction in the investment bank, blamed for most of the bad investments in US sub-prime securities.

UBS said it was making changes in its strategic direction and launching "a comprehensive programme to re-engineer its business," making its divisions autonomous and more agile in managing trends in the financial industry.

This, it said, would enable it better to navigate "the uncertain near-term outlook for global financial markets and potential changes in regulatory capital requirements."

"Our review has clearly revealed the weaknesses associated with the integrated 'one firm' business model," said chairman Peter Kurer. "Some of these weaknesses, such as the blurring of the true risk-reward profile of individual businesses, are the source of substantial risk, as we have seen in the past few months."

Rohner said UBS had already reduced risk exposure, costs and personnel of the investment bank.