The Beginning of an End? JPMorgan analyst Kian Abouhossein said Mr. Ermotti and Chairman Axel Weber had probably accelerated restructuring due to poor quarterly results:

"If the press reports are correct, UBS is taking the right actions to improve shareholder returns.  The IB is going back to its historic core franchise under Warburg."

Nevertheless, industry response to UBS's announcement suggested that the bank may be setting an industry standard.

• Espirito Santo Investment Bank analysts in a note to clients: "The changes being discussed in the media, if true, would represent a transformational change for UBS.  It is not just an additional cost-cutting exercise at the margin, but a strategy that would enable the bank to return much more capital to shareholders and/or significantly increase the capital ratios."
• Citi analysts: "If UBS does take radical action, we would expect this to kick off further industry restructuring."

Since Mr. Ermotti, a 52-year-old former co-head of equity markets at Merrill Lynch, assumed the role of CEO, the UBS has come a long way since its trading scandal cost the bank $2.3 billion, under the leadership of Oswald Gruebel:

• the bank has shifted its focus toward the bank's core private banking business for wealthy clients and away from the investment banking unit, which ran up $50 billion in subprime losses, forcing a Swiss government bailout in 2008.
• last year, the bank announced 3,500 job cuts
• this year, cuts would most likely to occur in its hard-hit trading and investment banking areas, according to a source familiar with the matter

C-I Note: Will the cuts be worth the "several billions of francs in exit losses, restructuring charges and realignments for this to get to the desired size" that Kepler analyst Dirk Becker predicts?  Will Carsten Kengeter, a co-head of the investment bank indeed head the fixed-income operations, which are expected to be split off into a separate unit to be wound down over time, as UBS bankers observed?  Will Mr. Ermotti provide much-needed answers on the bank tomorrow?

For further details, go to [Reuters, 10/29/12].