The top two UBS executives on Monday told U.S. brokers that the sudden departure of group chief executive Oswald Grubel will not lead to a sale of the unit.

Again: this business is not for sale, UBS Chairman Kasper Villiger and interim CEO Sergio Ermotti said in an internal memo to Wealth Management Americas employees.

Villiger and Ermotti also affirmed their support for the unit's CEO, Robert McCann. The former Merrill Lynch executive was hired two years ago to lead the U.S. unit's turnaround.

UBS is committed to further developing our franchise in this important wealth market under (McCann's) leadership, Villiger and Ermotti wrote, adding that a successful U.S. wealth management business is essential to UBS' strategy of operating as a global wealth manager.

Grubel's resignation is just the most recent bad news from UBS AG to contribute to an erosion of confidence among the brokerage's clients and its financial advisers. The statement from Villiger and Ermotti follows a long series of investment bank losses and other embarrassing headlines that raise questions about the Swiss bank's ability to manage itself.

Two weeks ago, UBS disclosed that a London trader allegedly lost $2.3 billion on unauthorized transactions. The incident undermined two years of efforts by Grubel, a veteran Credit Suisse executive called out of retirement, to revive the bank after it suffered massive losses before and during the financial crisis. He also had to stem the damage from a tax evasion scandal at the bank.

For advisers, the newest trading loss and Grubel's departure are part of another embarrassing episode that they now have to explain to clients.

A lot of the advisers have been telling us that this negative press was really hard to spin, recruiter Mindy Diamond of Diamond Consultants of Chester, New Jersey. Diamond has recruited UBS advisers to other firms. There are a lot of very frustrated UBS advisers.

One UBS adviser, who requested anonymity because he is not authorized to speak to the press, said U.S. brokers are not happy about being put on the defensive again.

These scandals are a little annoying, the adviser said. Customers keep asking us, 'How does this affect you?'

Recruiter Rick Peterson, of Rick Peterson & Associates in Houston, said the news added to the sense of instability for UBS America's brokers.

Every time you hear, 'UBS loses a pile of money' or 'UBS is in trouble with the U.S. government,' it means UBS is in trouble with their clients, said Peterson, who has also recruited UBS brokers. It just compounds in their minds.

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The news also breathed new life into a perennial market rumor that UBS would divest or spin-off its U.S. brokerage arm, which is not as profitable as the bank's private banking business.

McCann's broker-dealer unit pays advisers a percentage of fees and commissions, which often results in higher payouts than the salaries and bonuses received by private bankers. A broker's clients also tend to be more loyal to the adviser than to the firm.

Earlier this year, there were rumors that UBS was in talks to sell the U.S. business to Wells Fargo & Co, the big U.S. bank that has expressed interest in expanding its brokerage arm. A few years ago, HSBC was the purported suitor. Wells, HSBC and UBS declined to comment on the speculation at the time.

Before he joined the firm, McCann himself had been said to pursue a management-led spin off backed by private investors. UBS shot down that rumor as categorically untrue. But the rumor circulated again after the most recent problems.

Research analyst Richard Bove of Rochdale Securities contends UBS will keep the brokerage arm as it scrambles to get through a difficult market environment.

Given what UBS is required to do by the capital regulations, they're going to keep this business, Bove said. The U.S. brokerage is not capital intensive and it throws off cash.

Grubel had championed keeping the U.S. business, but now that he is gone, the pro-divestiture forces at UBS may gain the advantage.

Robert Mulholland, the No. 2 executive at UBS Wealth Management Americas, told the firm's regional and branch managers on a conference call Monday morning that the unit would remain part of UBS.

We are not for sale. It was the board's decision not to sell, not just Ossie's, Mulholland told Wealth Management Americas advisers, according to a UBS employee who listened to the call. What's the impact on WMA? In a word, nothing.

That is cold comfort, though, for veteran UBS advisers who in the past four years have weathered credit losses and a devastating scandal surrounding UBS private bankers helping wealthy U.S. residents hide assets offshore and avoid taxes.

Nearly a third of the firm's top advisers bolted and its client assets had plunged by about $119 billion in the year before McCann arrived. Before the latest imbroglio, UBS had reversed that trend and had been attracting assets and new brokers.

Now the tough client conversations have returned.

I had a client ask me, 'How can I trust you to manage my money, if you can't manage yours, said a veteran UBS broker, who asked not to be named. There's a serious lack of confidence in the firm. There's constant surprises.

(Reporting by Joseph A. Giannone and Ashley Lau, Editing by Chelsea Emery)

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