UBS said it expects to win back more money from clients in 2011 and has laid the foundations for a rebound in its investment bank as chief Oswald Gruebel turns around a bank almost felled by the crisis.

UBS said it had seen improvement across all its businesses in the fourth quarter – with total net new money of 7.1 billion Swiss francs – although inflows were “very small” at its core wealth management unit after 1 billion in the third quarter.

“We are optimistic that overall positive net new money inflows will continue in the first quarter. For the full year, we believe that net new money will strengthen noticeably,” UBS said in a statement.

Clients rattled by massive writedowns on toxic assets and a tax dispute with the United States had pulled nearly 400 billion francs from Switzerland's biggest bank in recent years.

“The results are a relief after the poor results of US brokers and those from Deutsche Bank and even Julius Baer,” said Helvea analyst Peter Thorne. “It is a relief to hear their optimism for 2011.”

Gruebel's overhaul of the investment bank started to pay off in the fourth quarter as equities and fixed income, commodities and currencies revenues improved, though bigger losses on the bank's own credit, as well as losses on student loans, kept net profit to just 75 million Swiss francs ($78.35m) after a surprise loss for the previous three months.

UBS described the investment bank results as “unsatisfactory in relation to our ambitions” but expects some improvement in the business's trading results in the first quarter, though this depended largely on market conditions.

UBS was forced to cut risky but potentially very profitable proprietary trading in favour of client flow business after it took huge losses in the financial crisis pushing it to take a bailout from the Swiss government in 2008.

“While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results,” Gruebel said in a statement.

Bank secrecy pressure hurts
While the bank won client cash in the Asia Pacific region – traditionally an area of strength for UBS – and among the ultra wealthy and Swiss customers, it continued to bleed a small amount of assets both onshore and offshore in Europe, where neighbouring countries have attacked Swiss bank secrecy.

Wealth management revenues rose two percent in the fourth quarter, though the unprecedented strength of the Swiss franc partly offset increased client activity, UBS said.

UBS said it made total litigation provisions of 230 million francs in the quarter, mainly in its wealth management Americas business, which pushed up operating expenses.

While this led to a pretax loss for the Americas business, which was hit hard by a tax dispute that ended with UBS being forced to hand client data to US authorities, it attracted 3.4 billion francs of new money after a small net outflow the previous quarter.

UBS, which is still held in suspicion by the Swiss public after booking the biggest loss in the country's history in 2008, said it would pay out 10 percent less in bonuses for 2010, cutting the bonus pool to 4.3 billion francs.

It also said 1.550 billion francs of the bonus pool would be be deferred to future years.