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ZURICH Dec 5 UBS AG has chosen operations chief Ulrich Koerner to run the Swiss bank's asset management arm when its head retires next year, an appointment that suggests a restructuring of the business may be on the cards.
The Swiss bank said Koerner would keep his job as head of Europe, the Middle East and Africa but would no longer be head of operations from Jan. 1, when he will replace John Fraser as chief executive of asset management.
Koerner, who in 2011 unsuccessfully challenged Sergio Ermotti for the top job at UBS, has been instrumental in efforts to slash spending at the bank and to simplify and centralise its structure.
The Swiss bank's asset management business is a small player in an industry increasingly dominated by much bigger firms such as BlackRock and Allianz Global Investors.
Koerner, a former McKinsey consultant, will have to focus on the asset management business's profitability and try to staunch fund outflows.
The asset management arm made pretax profit of 570 million Swiss francs ($629.38 million) last year, up from 430 mln Sfr in 2011. But it suffered 13.3 billion francs in outflows of client funds last year after inflows of 4.3 billion in 2011.
Overall in 2012, while the business had net inflows from third parties, total net new money flows were negative. This was strongly driven by outflows via UBS's wealth management businesses as these clients tended to favour cash deposits over money market funds and risk assets in the uncertain macro economic environment.
In the third quarter of this year, the asset management business had a cost-income ratio was 73.6 percent, compared with a target of 60 to 70 percent. Total outflows in the quarter were 7.5 billion francs.
A spokesman for UBS said Koerner would focus on growing the business.
Unlike Credit Suisse, which has offloaded parts of its asset management business and merged the remainder into its private bank, UBS is maintaining the division as separate from its private bank and investment banking arm.
UBS and Credit Suisse, Switzerland's two largest banks, are also pursuing different strategies in to cope with strict Swiss capital rules following the 2008-09 financial crisis.
Last October, UBS said it would lay off 10,000 staff and largely withdraw from its fixed-income business by 2015, while Credit Suisse has decided to stick with bond and debt trading activities.
Koerner's operations role will go to finance chief Tom Naratil, who adds it to his existing brief, the bank said.
Fraser, 62, a former Australian Treasury official, remains chairman of asset management.
($1 = 0.9057 Swiss francs) (Reporting By Katharina Bart; editing by Tom Pfeiffer and Jane Merriman)