[ by Larry Goldfarb ]

Andrea Orcel, the head of UBS's Investment Banking Unit, told staff at town hall-style meetings over the past 2 weeks that it will need 3 to 5 years to fully transform its investment bank under a plan outlined last month.  UBS said last month it will exit most of the capital-intensive fixed-income businesses at the investment bank to boost pretax return on equity to more than 15% starting next year.

Ms. Orcel, 49, was named sole head of the unit, while her former co-chief, Carsten Kengeter, 45, will wind down the debt businesses.  The investment bank is "core" to UBS, Ms. Orcel said at the meetings, adding that details of the strategy for each desk will be ironed out over the next 2 to 3 months.  She stressed that the review of the investment bank is over and businesses that are kept shouldn’t fear further cuts, although some job reductions may be necessary depending on market conditions.

Ms. Orcel had a number things to say about the Investment Bank's strategy going forward:

• The success of delivering on the strategy and targets will depend on the people UBS can attract and retain.  She didn’t rule out hiring individual bankers in certain areas to help the company gain market share.

• The bank will focus on client needs and won’t stop offering services overnight, even in areas it’s winding down.

• UBS’s investment bank aims to be a market leader in Europe, where it lost some share in recent years.  The Asia-Pacific region is being viewed as a "second home market," and UBS will defend its position there.

• UBS has no plans to exit the Americas or emerging markets.  The firm will pursue a selective strategy in the Americas rather than trying to compete in all businesses with the U.S. banks.  Emerging markets will be crucial for UBS’s growth in the future, and the bank can be a top-3 investment bank there.

• The corporate clients unit, which will contribute about a third of total revenue for the investment bank, will be organized regionally with (i) David Soanes heading Europe, the Middle East and Africa, (ii) Steve Cummings in the Americas and (iii) Matthew Grounds in the Asia-Pacific region.  Rajeev Misra, who co-headed fixed income, currencies and commodities with Roberto Hoornweg, will become global head of financial solutions, Hoornweg is leaving the bank.

• Investor client services, contributing two-thirds of investment-bank revenue, will be led by Mike Stewart as global head of equities, Chris Vogelgesang and George Athanasopoulos as global co-heads of foreign exchange and precious metals and Chris Murphy as global head of rates and credit.

• There will be no changes in business areas that the bank is keeping and reorganization will mostly affect the rates and credit businesses.

• UBS is cutting risk-weighted assets at the fixed-income unit by 80 billion francs ($85 billion) from 110 billion francs.  Of these, about 30 billion francs will come from credit businesses and 40 billion francs from rates.

For more information, please read [Bloomberg, 11/24/12].