RLPC-UBS closes London-based distressed debt desk

LONDON Nov 1 (Reuters) - UBS is closing its London-based distressed debt trading desk as the bank winds down its fixed income business as part of a wider plan to cut 10,000 jobs and shrink its investment bank, banking sources said on Thursday.

UBS's distressed debt trading desk was responsible for trading leveraged loans and high-yield bonds for poorly- performing non-investment grade companies, often at big discounts to face value.

Banks' debt trading operations have been in focus since late 2010, after the U.S. Congress approved the Volcker rule which aimed to restrict banks' trading on their own account rather than for customers.

UBS is keeping a handful of staff on in the distressed debt team to sell the bank's distressed portfolio, which totals around 200 million euros, traders said.

Distressed debt traders, sales staff and analysts were let go on Tuesday as part of 100 fixed income job losses.

UBS' fixed income business is no longer profitable due to stricter capital rules on riskier business introduced after the financial crisis as the Swiss bank returns to its private banking roots.

UBS is closing its sovereign, supranational and agency bond business and is laying off staff in its commercial paper team as well as cutting back in corporate bonds, according to IFR Markets.

Around 40 percent of the fixed income cuts are expected to come from the UK, 30 percent will be in the United States and 25 percent will be in Switzerland, a banker said.

Asia is expected to account for around 5 percent of the cuts, an Asia-based banker said. Some fixed income jobs have already been cut in Japan, another banker added.

UBS' par leveraged loan and high-yield bond trading teams and investment-grade bond trading teams are also expected to see reduced activity and some departures, several bankers said.

UBS declined to comment. (Reporting by Claire Ruckin; additional reporting by Prakash Chakravarti and Wakako Sato; Editing by Tessa Walsh and Mark Potter)