UBS boss Oswald Gruebel is targeting an annual pretax profit of 15 billion Swiss francs ($14.9 billion) as he aims to put the subprime crisis and a U.S. tax row behind the loss-making bank and win back clients.

Chief executive Gruebel told investors on Tuesday the 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.

A transformation like this is not easy. If it was easy I would not be here, Gruebel told UBS's first strategic presentation since his February appointment.

There will be three guiding principles: reputation, integration, execution: this is what we will stand for in the market... 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 in the third quarter.

Pre-tax of 15 billion certainly sounds good. But who knows what will happen in five years, and will the targets be reached in three or five years? UBS says themselves that they need time. There is a long and stony path before them, one trader said.

UBS shares, which have risen just 18 percent this year while the wider DJ Stoxx European banking sector <.SX7P> has gained nearly 60 percent, were up 1.2 percent at Swiss francs at 17.70 Swiss francs at 0828 GMT.

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.

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

Since his February 26 appointment Gruebel, the 65-year-old former Credit Suisse boss, has been pushing through a tough restructuring that involved selling Brazilian unit Pactual for $2.5 billion, boosting UBS' capital strength and cutting costs.


Banking veteran Gruebel, a former trader with no university education, 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 is the world's number 2 wealth manager with $1.7 trillion in assets under management, but is leader in the super rich, or ultra-high net worth, category.

Gruebel gave no targets for reversing client withdrawals, but a presentation for the investor day said it would take time to restore positive net new money growth in wealth management.

The wealth management division, to which UBS owes much of its fame, is still losing net client money at all of its divisions, including in the core Swiss market.

Gruebel agreed to come out of retirement earlier this year to steer UBS through a subprime and tax storm.

The no-nonsense CEO, seen in Switzerland as a turnaround guru after he managed to restructure Credit Suisse in his 2002-2007 tenure there, has also brought in new executives to head up nearly all of UBS's key divisions.

His latest addition, ex-Merrill Lynch private banking veteran Robert McCann, faces the challenge of making UBS' American wealth management division profitable in the aftermath of a bitter U.S. tax row and amid stronger competition in the U.S. private banking arena.

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.

UBS also said it expected net new money at the asset management division to be positive again in 2010.

(Additional reporting by Rupert Pretterklieber and Emma Thomasson; Editing by Hans Peters)

($1=1.009 Swiss Franc)