Gruebel charts UBS strategy

10:56, November 18, 2009      

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UBS AG aims to reach 15 billion Swiss francs ($14.9 billion) in annual pretax earnings in the next three to five years, as Chief Executive Officer Oswald Gruebel seeks to return Switzerland's largest bank to profit.

UBS also set a goal for return on equity, a measure of profitability, of 15 percent to 20 percent in the same period, the Zurich-based company said in a statement before its investor day yesterday.

Gruebel, who joined the bank in February, has already announced 7,500 job cuts, sold a Brazilian unit, replaced four executive board members and tapped investors for 3.8 billion francs to bolster capital. UBS has been unprofitable for the past four quarters after losses at the investment bank and withdrawals of client funds from the wealth management business.

"The management is trying to address and resolve all issues," Dirk Hoffmann-Becking, a London-based analyst at Sanford C. Bernstein Ltd who rates UBS "underperform", said before the release. "It will take longer than people expect."

UBS has risen 18 percent in Swiss trading this year, compared with a 102 percent gain at Credit Suisse Group AG, the second-largest Swiss bank by assets. The 63-company Bloomberg Europe Banks and Financial Services Index increased 51 percent.

UBS amassed more than $50 billion in write downs and losses during the credit crisis, the most of any European bank, and was forced to take a lifeline from the Swiss government last year. In seeking to rebuild profitability, the bank may have to rely on the same business that brought it near collapse: the trading of debt securities, according to analysts.

"The investment bank, in particular fixed-income, currencies and commodities trading, is probably the largest source of upside in pretax of the restructuring plan," Huw van Steenis, a London-based analyst at Morgan Stanley, said in a note to clients. He rates UBS as "equal-weight."

Source:China Daily
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