After 350 days in the job, UBS boss Sergio Ermotti has bowed to investor pressure and agreed to radically slim down the Swiss bank's investment banking unit. The closure of a number of business lines and loss of 10,000 jobs should enable UBS to deliver a higher return on equity and pay out healthy dividends. But the strategy is not without risk.

Until recently UBS was still arguing it needed to offer the full range of investment banking services, citing synergies within the unit and with its core wealth management business. The bank instead argued it could hit its return targets through a planned Sfr2bn ($2.14bn) of cost cuts and more efficient use of capital; it cut risk-weighted assets by a quarter to 300bn francs on a full Basel III basis in the year to the end of September.