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PREVIEW-Gruebel's ambitious UBS goals under investor scrutiny

By Steve Slater LONDON, Nov 12 (Reuters) - Oswald Gruebel, brought out of retirement 21 months ago to revive Switzerland's biggest bank UBS, is under pressure next week to show his turnaround is on target after weak results last quarter. The UBS boss, who has set his sights on annual profits of 15 billion Swiss francs, will on Tuesday deliver his annual update at London's Honourable Artillery Company, where investors will want reassurance that he can hit his targets. The UBS investor day marks the first anniversary of Gruebel's ambitious plan to boost profit beyond its pre-crisis level of 2006 and rebuild the bank's reputation. He gave the bank three to five years to achieve this. "Most people are pretty pleased with the performance overall, but there's still a credibility gap, led by its investment banking business, on where the medium-term targets lie," said Jon Peace, bank analyst for Nomura in London. A shock loss by UBS's investment bank last quarter raised those worries. Sluggish trading resulted in a 36 percent slump in investment banking revenues from the second quarter. Rivals also suffered in tough markets, but not as badly. Gruebel reckons the unit can deliver an annual profit of 6 billion francs ($6.2 billion) on revenues of 20 billion. He wants to keep its top position in cash equities and equity capital markets and rebuild in fixed income, currencies and commodities (FICC), and has hired bankers to do so. The 66-year-old German with a straight-talking reputation arrived with the task of rebuilding a shell-shocked bank and winning back clients after the loss of over $50 billion on toxic assets and a damaging U.S. tax row. He aimed to instill a new culture of disciplined risk-taking, and strict cost and capital control. UBS's investment banking troubles last quarter overshadowed a key turnaround in another area -- it stopped bleeding client money for the first time since early 2008. Clients had pulled out nearly 400 billion francs over the previous 2-1/2 years. Gruebel expects wealth management to deliver 4.6 billion francs in annual profit on assets of 1 trillion francs. Investors are looking for clarity on other key issues. More details are expected from Chief Financial Officer John Cryan on the impact of tough Swiss capital regulations; Carsten Kengeter, in sole charge of the investment bank since September, will be quizzed on the prospects for 2011; and Robert McCann has been tasked with reviving the U.S. wealth management business, which is struggling for profit. Chris Wheeler, analyst at Mediobanca, said executives need to provide comfort that "when markets do pick up they (UBS) can race ahead," adding that the recovery needs more benign markets. "UBS needs robust markets for a few quarters because that will not only help them get a stronger flow of revenues in investment banking, but it will help the asset gathering businesses," Wheeler said. ($1=.9747 Swiss Franc) Keywords: UBS/STRATEGY (steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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