UBS will cut its return on equity target by 5 percentage points to 10-15 percent at an investor day next month when the Swiss bank is expected to announce shrinking its investment bank, a newspaper reported on Sunday.

The SonntagZeitung said the new target would be announced by Sergio Ermotti who took over as interim chief executive last month after Oswald Gruebel stepped down over the $2.3 billion unauthorized trading scandal.

UBS declined to comment on the article.

Two years ago, Gruebel set a medium-term return-on-equity target of 15-20 percent along with other ambitious forecasts which he had already been forced to abandon in recent months as the UBS investment bank failed to deliver.

Citing an unnamed manager familiar with Ermotti's plan, the newspaper said Ermotti would not set an absolute profit target but would announce cuts to the investment bank, which should in future be oriented to serving the wealth management business.

However, the newspaper said UBS wanted to maintain its leading position in some investment banking businesses, including global foreign exchange and equities trading.

The 51-year-old Ermotti, who only joined UBS in April after being passed over for the top job at Italy's UniCredit , has made overhauling the investment bank a priority.

He is expected to announce details about the revamp at an investor day on November 17 and the unit is bracing for more job cuts in addition to the 3,500 for the whole bank announced in August.

(Reporting by Emma Thomasson; Editing by Mike Nesbit)