UBS back to profit in fourth quarter

This year's fall is in line with the 11.9 percent drop in the DJ Stoxx European banks index <.SX7P> and better than the 14.5 percent drop in the share price of rival Credit Suisse

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UBS' investment bank, which had shown improvements in the previous two quarters, turned positive at pretax level with a gain of nearly 300 million francs after the bank cut its balance sheet by a further 11 percent and slashed personnel costs.

Gruebel said he expected the investment bank's performance to improve 2010, although this would depend on market swings.

"The message there is that there is light in the market and we are enjoying our position while there is still light," Chief Financial Officer John Cryan told reporters.

STILL BLEEDING CLIENT MONEY

UBS clients withdrew a hefty 56 billion francs, up from 37 billion in the third quarter and confounding analysts' expectations that outflows would slow after the Swiss bank settled a bitterly contested probe into help it had offered rich Americans to dodge taxes.

But that deal is in question after a Swiss court ruling in January and may prove a first tough challenge for Merrill Lynch veteran Robert McCann, who was hired by UBS in late October to revitalise its scarred U.S. wealth franchise.

While the largest withdrawals were seen at UBS' key Wealth Management and Swiss Bank division, the Americas wealth division also came under pressure, suffering net outflows of 12 billion francs, more than twice analysts' expectations.

But Cryan said the positive quarterly figures should encourage clients to stop taking money out of the bank.