UBS boss Oswald Gruebel set an ambitious target for annual pretax profit of $15 billion, vowing to rebuild the loss-making bank and win back clients after the subprime crisis and a bitter U.S. tax row.

Chief executive Gruebel told investors on Tuesday his new strategic plan was a revolution and reaffirmed his commitment to an integrated banking model twinning traditional wealth management strength with a broad investment banking offering.

But, true to the 65-year-old German's straight-talking reputation, he did not promise overnight miracles for the Swiss bank.

A transformation like this is not easy. If it was easy I would not be here, banking veteran Gruebel, seen as a turnaround guru for reviving Swiss rival Credit Suisse, told UBS's first strategic presentation since his appointment.

The mid-term target would bring UBS slightly above its pre-crisis performance in 2006, and Gruebel said this would be achieved through a new culture of disciplined risk-taking, strict cost and capital control and adherence to regulation.

There will be three guiding principles: reputation, integration, execution: this is what we will stand for in the market, Gruebel told a packed Zurich auditorium. We want to ensure that what has happened to UBS should not happen again.

Gruebel's new targets for the next three to five years also include a cost-to-income ratio of 65 to 70 percent compared to 110 percent now, and return on equity of 15 to 20 percent, compared to negative 16 percent.

The long time horizon for the turnaround could require a lot of patience and nerves of steel from investors. said Kepler analyst Mathias Bueeler.

UBS shares, which have risen 18 percent this year while the wider DJ Stoxx European banking sector has gained nearly 60 percent, were up 0.23 percent at 17.52 Swiss francs at 1226 GMT, outperforming its peers.

The stock has consistently underperformed rivals in 2009 and fell again after UBS posted a larger-than-expected third quarter net loss on November 3 of 564 million francs, the seventh out of eight straight quarters the Swiss bank has been unprofitable.

UBS has not given any guidance for the full year, but while its investment bank has recovered at an operating level, the bank is seen heading for another loss, albeit much smaller than last year's pretax loss of almost 28 billion francs.

According to Thomson Reuters I/B/E/S data, the bank is seen making a pretax profit of 7.7 billion francs in 2010.

RESTORING CLIENT CONFIDENCE KEY

Gruebel, credited with turning around Credit Suisse during his 2002-2007 tenure there, said he wanted UBS to boost its number one position as banker to the super rich and remain the number one bank in Switzerland, while focusing growth on Asia.

UBS, the world's No. 2 wealth manager with $1.7 trillion in assets and the leader in the super rich space, is suffering client withdrawals across the board.

The bank had to be rescued by the Swiss state last year and stood accused of helping rich Americans dodge taxes in a U.S. tax litigation that is now settled.

The UBS turnaround story will only really get traction when the hard facts improve substantially and the key element remains the outflow of client assets, Wegelin analysts Marco Schwender and Martin Koch wrote in a note.

Gruebel gave no targets for reversing client withdrawals, but said it would take time to restore net asset growth in wealth management. The bank said it expected net new money at the asset management division to be positive again in 2010.

This turnaround will be a journey, it won't be an event, said Robert McCann, an ex-Merrill Lynch wealth management boss brought in to restore UBS' battered American wealth franchise.

Gruebel said the recovery of UBS' investment bank, blamed for bringing the whole group to its knees after risky bets on the U.S. subprime market, was already evident.

He stressed that the rebuilding of the investment bank would go through the fixed-income division, the segment which led UBS to make more than $50 billion of writedowns.

UBS' investment bank made $4.3 billion revenues since the start of this year, nearly eight times less than sector leader Goldman Sachs, which had revenues of $33.5 billion, and one fourth of the $16.7 billion reported by Credit Suisse.

Investment Credit Suisse