Blow for banking veteran as clients race to take out cash

UBS clients withdrew money at twice the expected rate in the fourth quarter, eclipsing the bank's first net profit since Oswald Grübel took the helm a year ago and raising concern he will struggle to steady the ship.

Grbel, the banking veteran who had nursed rival Credit Suisse back to health, delivered a profit of 1.2 billion Swiss francs (720,000) a year after he was hired to rebuild UBS. He said further positive quarters were needed for the scandal-tainted Swiss bank to restore client trust.

Clients withdrew a hefty SFr56bn, up from SFr37bn in the third quarter and confounding expectations that outflows would slow after UBS settled a bitter US probe into help it offered rich Americans to dodge taxes.

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UBS, left damaged by the tax row and the credit crisis, has struggled to attract clients and investors, with doubts about the US settlement and concerted attacks on Swiss banking secrecy further complicating Grbel's task.

"(He] is certainly the right man for the job, but it will be a long journey," said Manfred Hofer, head of equity research at LGT Capital Management.

UBS will pay about SFr2.9bn (1.7bn) in cash bonuses for 2009, up about a third from depressed payouts a year earlier.

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