UBS AG's new chief executive hired a former colleague from rival Credit Suisse on Wednesday to lead a cost-cutting drive at the loss-making Swiss bank.

Oswald Gruebel, a former Credit Suisse CEO brought out of retirement by struggling UBS in February, named Ulrich Koerner -- whom he touted as an expert in processes, systems and technologies -- as chief operating officer.

UBS said Koerner had a track record as a turnaround manager at Credit Suisse, his employer until last September, and would seek group-wide measures to enhance profitability and cost efficiency, supporting Gruebel and division heads to develop and implement strategy.

An analyst said the appointment, which should increase accountability within the bank, showed Gruebel was starting to make his mark on UBS.

Koerner will oversee the bundling of group-wide units like personnel management, procurement, real estate and facility management into the bank's corporate center.

Information technology units of the business divisions will also be consolidated at group level, which UBS said should create sustainable efficiency increases and cost savings.

Shares in UBS, which have tumbled in recent days on fears that the bank would announce further writedowns as Gruebel seeks to get all the bad news out of the way, were up 1.3 percent at 10.84 Swiss francs at 0847 GMT, outperforming a 2.7 percent fall in the DJ Stoxx European banking sector index .

Vontobel analyst Teresa Nielsen welcomed the fact Gruebel was starting to act and said his appointment of Koerner should create an environment in which employees were more accountable.

We believe Ulrich Koerner has a very good background in restructuring seen (most recently) at Credit Suisse and see the change as positive for the future strategy of UBS, she said in a note to clients, confirming her buy recommendation on the stock.

A UBS spokesman said the bank could not quantify potential savings from the moves.

The areas to be centralized, including IT, personnel, procurement and facility management, currently employ about 15,000, many of them in Switzerland, the spokesman said.

The bank has already announced thousands of jobs cuts in the crisis, aiming to bring its total workforce to around 75,000 by the middle of the year, from about 77,000 in February.

TIGHTER RISK, LEGAL CONTROL

Gruebel had already signaled that further cost cuts would be inevitable.

UBS also said it is strengthening the management of its finance and risk control as well as its legal and compliance functions at the group level, which it said would make control functions stronger and more effective.

The tarnished Swiss bank is struggling to rebuild its once powerful brand after massive investments in risky U.S. assets forced it to accept a government bailout last year.

The bank revised up its 2008 net loss to 20.9 billion Swiss francs ($18.37 billion) on March 11 to include a $780 million fine to settle a damaging U.S. tax probe case.

It said at the time its near-term outlook was extremely cautious, warning that its balance sheet remained exposed to illiquid and volatile markets.

A German-Swiss dual national born in 1962, Koerner joined Credit Suisse in 1998 and held various management positions, including COO and Chief Financial Officer of a business unit.

His last job at Credit Suisse was heading the Swiss client business, before he left the bank last September.

Koerner, who has a doctorate from the St. Gallen university in business administration, previously worked as an auditor and management consultant, mainly for financial services firms.

He replaces Walter Stuerzinger, currently COO of the corporate center, who UBS said will leave the board but has committed himself to supporting Koerner.

Investment Credit Suisse