Can Gruebel turn a Koerner at UBSuisse?

After years of looking down on its cross-town rival, UBS now wants to be like Credit Suisse. Hiring big names associated with the CS success story looks like a quick fix, but don't bank on it.

Recently appointed UBS chief Oswald Gruebel has taken on former Credit Suisse colleague Ulrich Koerner as the hatchet man (official title Chief Operating Officer) he desperately needs to cut costs and reshape the badly-damanged bank. And there's every likelihood Gruebel is casting his beady eye at others who worked for him during his reign at Credit Suisse, as he shakes out the UBS management team he inherited in February.

Koerner, like Gruebel, has all the right credentials, with a reputation as a "turnaround manager" at his former employer. And the incentives are there too. Koerner has a point to prove after losing out on the top job at Credit Suisse to Brady Dougan. UBS investors, whose faith in the once mighty Swiss bank has been obliterated by one disaster after another, have already signalled their belief in Gruebel and rewarded Koerner's appointment with a modest rise in the share price.

Gruebel and Koerner have a (Swiss) mountain to climb at UBS. The veteran CEO has job cuts high on his agenda. UBS has already announced about 11,000 cuts and aims to slash headcount from a peak of 83,800 in Q1 2008 to 75,000 this year. Even this will barely make a dent in the bank's huge cost base. With a cost/income ratio of 680 percent in 2008 (before its credit loss expense or recovery) -- up from just over 70 percent in 2005 and 2006 (and considered expensive even in the pre-crisis era) -- the task is enormous. Koerner is taking on a "team" of some 15,000 people in the newly created "Corporate Center" which the bank says will integrate its "group-wide infrastructure and service functions". Since his mandate is to cut costs, which inevitably means jobs, he's unlikely to get a warm welcome.

Gruebel optimistically thinks it will take up to two years to get clients back through the doors at UBS, the only way real investor confidence will be rebuilt. But in the meantime the only way to get the bank onto an even keel is to reduce expenditure and quickly. Operating expenses in 2008 were back at their 2005 levels, but with the bank still cautious about its outlook there is little prospect of revenues getting anywhere near their once heady heights.

For Koerner, born in 1962, the opportunity to radically overhaul the inner workings of the bank and establish himself as heir to the older Grueber must be an attractive one. But for many of the UBS bankers who oversaw the bank's demise, Koerner's arrival will almost certainly mark the end of an era.

- Alexander Smith is a Reuters columnist. The opinions expressed are his own --

By Alexander Smith

LONDON, April 1 (Reuters) -