UBS CEO Sergio Ermotti, having won the confidence of bank board members, now must  convince investors that the investment bank should be reorganized - for the 5th time in 6 years. Ermotti, 51, took over as Interim CEO, succeeding Oswald Gruebel, after the bank disclosed it had lost $2.3 billion from unauthorized 'rogue' trading.  He will lay out the bank’s strategy to investors at a meeting this week in New York.  Some think he may announce that UBS will slash the investment bank’s risk-weighted assets by 70 billion francs ($76.5bn), on top of 100 billion francs in cuts already announced, and reduce staff at the unit. Specifically, analysts see deeper cuts in assets and jobs at the investment bank, especially in fixed-income trading, where rising capital requirements are eroding profitability.  One London-based analyst out it this way:

"They’ve got to scale down the fixed-income business, otherwise they die.  Nobody has voluntarily shrunk their investment bank to the extent that they’ll have to do.  It is a very tricky job and execution is what worries me most.”

The shift in strategy coincides with another round of management upheaval at Zurich-based UBS, which was ravaged by more than $57 billion of credit-related losses during the financial crisis of 2008. Tom Naratil became chief financial officer in June, replacing John Cryan, after serving as CFO and chief risk officer of UBS’s wealth management Americas unit. Maureen Miskovic, a former risk officer at Boston-based State Street Corp. and Lehman Brothers Holdings Inc. of New York, took over as group chief risk officer in January. The Question of a Split-Up. Former UBS Chairman Peter Kurer, in a commentary for Bloomberg View, said UBS and Credit Suisse Group AG (CSGN) should split off their investment banks to regain the trust of investors and clients.  “The only way to regain trust on a sustainable basis, is to separate the investment bank from the retail and private-banking units.” He added that investment-banking units need to be “independently governed, funded and capitalized.” That position was fueled by the above-mentioned $2.3 billion trading loss discovered in September. heightened investors’ impatience with the securities business. For further details, go to:    [Bloomberg 11/16/11]