The chief executive of UBS gave a ringing endorsement of the Swiss bank’s wealth management arm and added that the wealth management division will no longer subsidise other parts of the embattled bank. Marcel Rohner told shareholders at the bank’s annual general meeting yesterday that UBS will continue to invest in wealth management activities, which he said continued to stand far ahead of its competitors. Investment banking, meanwhile, must survive under “its own steam” and will no longer be cross-subsidised by other parts of UBS, he said. “Our global wealth management business is the backbone of our activities. Last year it turned in an absolute record performance. We will continue to invest in hiring new advisors and in continuing to gain market share worldwide,” Mr Rohner said. The comments come after UBS has suffered a combined $37 billion bill for write-downs linked to the US sub-prime mortgage meltdown. The massive losses and subsequent planned rights issue have prompted analysts to speculate that UBS, which covers investment banking, asset management and private wealth management activities, may be broken up. But Mr Rohner made it clear that although UBS will have to make sharp cost cuts, wealth management was a vital part of its future plans: “Both in Switzerland and internationally, we will now make tireless efforts in winning back the lost trust of our clients.” At the outset of his speech, Mr Rohner said that UBS’s 2007 loss of SFr4 billion had been a “disastrous result” which had damaged trust in the bank. Meanwhile, at the same meeting, UBS chairman Marcel Ospel confirmed that he would not stand for re-election to the post. UBS’s general counsel, Peter Kurer, has been proposed by the board to take up the chairmanship, a move that has prompted some investors, such as the former UBS president Luqman Arnold, to protest that an outsider should get the role instead. Elsewhere in Mr Rohner’s statement, he said one of UBS’s biggest recent errors was that it cross-subsidised other business segments. “We used our surplus cash flow from the wealth management business to promote organic growth in the investment bank. That was where we went wrong,” he said. In future, surpluses from the wealth management business will be returned to shareholders through share buybacks or dividend increases. “The first thing we have started to do is to reduce our risk. Today our problem positions are only about a third of what they were at the end of September 2007. But we still have risk exposure, and the remaining portfolios are still subject to fluctuations,” he added. In his speech, Peter Kurer said UBS needed to examine its overall strategy and shape, particularly the role of its investment bank, while augmenting its role as the world’s largest wealth manager. Following the annual meeting, Mr Arnold reiterated his complaint that UBS's board had not made a search for external candidates for the chairmanship. "We remain concerned that UBS underestimates the complexity of the challenges it faces," his statement said.