UBS's Gruebel needs more time as clients pull money

UBS' fourth quarter net profit came in at 1.205 billion Swiss francs (722.6 million pounds), its first positive quarter after four negative ones, partly helped by one-off tax credits, lower-than-expected own credit charges and a cut in bonuses.

The figure was ahead of expectations of 326 million francs in a Reuters poll.

"They beat expectations but it looks like it was only because of non-operational items" said Kepler Capital Markets analyst Dirk Becker, noting margins were being eroded.

"The one big (thing) they achieved was to get back into profit in the fourth quarter, but it was expected."

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. U.S. proposals to limit risk-taking by banks should have no or little effect on UBS, he added.

"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.

U.S. TAX COMPLICATIONS

Complications on the U.S. tax probe after a Swiss court ruling in January and a smaller army of client advisors have set a potentially tough first challenge for Merrill Lynch veteran Robert McCann, who was hired by UBS in October to revitalise the scarred U.S. wealth franchise.

McCann has yet to unveil his strategy, while many analysts are betting Gruebel may end up selling the unit.