Bloomberg News ZURICH — Marcel Ospel, chief executive of UBS AG, says that — by contrast with past years — he feels calm about his banking company’s annual meeting in Gstaad, Switzerland, Jan. 18.

Mr. Ospel, 50, has good reason to tranquil. For the first nine months of 2000, UBS reported record net income of $3.8 billion — up 80% from a year earlier. On July 12, when it announced it was buying Paine Webber Group Inc., Wall Street’s fourth-largest broker, for $12.4 billion, Mr. Ospel gained a coveted foothold in the United States.

“This year will be much easier than last,” he said. “We’ve demonstrated what the organization is capable of — not only in economic results but also strategically.”

Still, the company’s money management business is faltering because of poor returns. UBS Warburg, its London-based investment banking unit, ranked only sixth in profitability after reporting a record operating profit of $2.2 billion in the first nine months, according to Bloomberg data.

Warburg is an also-ran by other benchmarks too: 10th in global equity offerings, 15th in U.S. equity offerings, 11th in advising on U.S. mergers and acquisitions.

As part of a rebuilding effort, UBS is on a hiring spree in the United States. In November, Mr. Ospel brought in Kenneth Moelis, co-head of investment banking at Credit Suisse First Boston, to be co-head of investment banking in the United States. Moelis’ clients include Hilton Hotels Corp., buyout firm Leonard Green & Partners LP, and billionaire investor Sam Zell.

Adding fire to the ongoing rivalry with CS First Boston, Warburg U.S. chief John Costas flew to Los Angeles in early December and snared 20 more CS First Boston investment bankers, including two managing directors.

Analysts are divided over whether Mr. Ospel can complete UBS’ transformation: of 39 brokers offering research on the company, 15 have positive ratings, 2 negative, and 22 neutral.

“UBS is a classic recovery story,” said Susan Smith, European equities director of M&G Group PLC in London, which manages $10.6 billion and owns 800,000 shares of UBS. “But it’s not a great recovery story. As an investment it’s still fraught with risks.”

Mr. Ospel is committed to changing the company’s direction: to build on the Swiss model of banking that emphasizes discretion and good service while altering the mix of businesses. UBS says commercial lending generates a poor return on equity for all but the world’s two or three biggest banks, including Citigroup Inc.

He has made fees from investment banking and the private bank UBS’ biggest sources of income. He’s integrating Warburg, bought in 1995; UBS’ private bank, which caters to 240,000 clients; Paine Webber; and the bank’s pension fund management unit.

Even with Paine Webber, say analysts, UBS must build a presence on Wall Street, the world’s No. 1 capital market. Paine Webber, which earned net income of $628.6 million in 1999, focuses on managing $500 billion of assets for its 2.7 million individual wealthy clients. It is doing very little business in corporate finance.

“UBS has yet to do a deal that would have been transforming in terms of U.S. investment banking,” said Ridgewood, N. J.-based bank consultant Rafael Soifer.

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