<div><p>NEW YORK (Reuters) - The embattled U.S. wealth management business of Swiss bank UBS AG <UBSN.VX> <UBS.N> continued to bleed client assets in the fourth quarter, hurt by fleeing advisers and negative publicity from a tax-fraud scandal.</p><p>UBS Wealth Management Americas, mostly the U.S. brokerage formerly known as PaineWebber as well smaller businesses in Canada and Puerto Rico, generated pre-tax profit of 178 million Swiss francs ($166 million) in the quarter. That was up 62 percent from the third quarter and a rebound from a year-ago loss driven by settlements related to auction-rate securities.</p><p>But the results were sobering for UBS Americas, which suffered defections of front-line brokers and clients. It said its ranks of advisers fell by 202, or 3 percent, to 7,084 during the quarter.</p><p>Half of the departures reflected brokers jumping ship. UBS executives told analysts on Tuesday that the rest were culled under an aggressive job-cutting scheme. Meanwhile, UBS pulled back recruiting efforts after offering some of the Street's most lucrative pay packages.</p><p>UBS group Chief Financial Officer John Cryan told analysts that UBS wanted to start recruiting again but that attracting financial advisers in the Americas was "challenging."</p><p>Adviser defections, a headache every major U.S. brokerage has had to contend with, hit UBS Americas particularly hard in the fourth quarter.</p><p>In dollar terms, roughly $11.2 billion of assets were withdrawn by UBS Americas clients -- more than twice the amount analysts had forecast and nearly 2 percent of total client assets. That followed third-quarter outflows of $9.3 billion.</p><p>The outflows were offset by rising market prices. UBS Americas client assets were little changed during the fourth quarter at 737 billion francs, or $690 billion.</p><p>The results capped the unit's first quarter under the leadership of Robert McCann, a former Merrill Lynch executive recruited in October to revive the No. 4 U.S. brokerage.</p><p>McCann, who has kept a low profile since joining UBS Americas, is expected to unveil his plans for the business around March 1, after an inaugural "100 day" period of preparation.</p><p>Heavy outflows and adviser attrition show that McCann's "renewal team" of other ex-Merrill executives faces a tough battle helping UBS recover from years of credit losses and now the fallout from a U.S. tax-dodging scandal.</p><p>In February 2009 UBS agreed to pay $780 million and disclose the names of 250 clients to settle a criminal probe by U.S. authorities. The Swiss bank was accused of helping American clients avoid taxes by hiding assets abroad.</p><p>UBS' fourth-quarter net profit came in at 1.205 billion Swiss francs, its first positive quarter after four negative ones, helped by one-time gains. The figure beat expectations of 326 million francs in a Reuters poll.</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=68752601&bid=informcom" /></div><div id="copyright"><div>

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