(Reuters) - Swiss bank UBS AG’s UBSN.VX(UBS.N) caretaker chief executive Sergio Ermotti has ruled out a sale or spinoff of the investment bank and is planning to shrink the investment-banking unit, the Wall Street Journal reported.
Ermotti, who was appointed chief following Oswald Gruebel’s resignation after UBS’ investment bank lost $2.3 billion in alleged rogue trading, is working on a major overhaul of UBS’s troubled investment bank.
The interim CEO has decided to significantly reduce the scope and size of the investment bank in order to bolster UBS’s focus on its key wealth management business, the report said citing people familiar with Ermotti’s thinking.
Most of the proposed changes are expected to be in parts of the investment bank’s fixed-income business, the report said.
In August, the bank unveiled plans to slash about 3,500 jobs, almost half of them from its investment bank, in a bid to shave some 2 billion Swiss francs from annual costs by the end of 2013.
Ermotti, who has kept the bank’s board informed of the plans, is likely to announce his plans at an investor meeting on November 17, the report said.
Ermotti intends to cut the amount of capital at the investment bank’s disposal as he diverts more resources to the wealth management unit, with a focus on Europe, Asia and the U.S., the reports said.
UBS was not immediately available for a comment on the Journal report.
Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Gary Hill