UBS Profit Falls on European Debt Crisis LONDON - UBS, the largest Swiss bank, said Tuesday that fourth quarter profit had slumped 76 percent from a year earlier, as new money coming in to its wealth management unit failed to make up for a loss in investment banking. Net income fell to 393 million Swiss francs, or $427 million, in the last quarter of 2011, from 1.7 billion francs in the same period a year earlier, the company said. The investment-banking unit had a loss of 256 million francs compared to a profit of 100 million francs in the fourth quarter of 2010. It is the second consecutive quarterly loss, and the bank said the beginning of 2012 was looking equally tough. "Ongoing concerns surrounding euro zone sovereign debt, the European banking system and U.S. federal budget deficit issues" are likely to weigh on demand for the bank's services and especially trading volumes at the investment bank in the first quarter of this year, UBS's management said in its quarterly report. UBS said it cut its 2011 bonus pool for the investment bank by 60 percent from a year earlier. However, UBS said it expects to continue to attract client funds to its wealth management operations in the first quarter of this year. Net new money there in the last three months of 2011 rose to 5 million francs, from 3.4 million francs a year earlier. The bank, based in Zurich, also strengthened its capital position by increasing the so-called Basel 2.5 tier 1 ratio to 16 percent from 13.2 percent. Sergio P. Ermotti, who has run UBS since September, is pursuing a cost-cutting plan that would reduce investment banking and increase the focus on the more successful wealth management business. UBS created the plan to help it comply with stricter capital requirements for banks by the Swiss government and a drop in demand for investment banking services and products. Mr. Ermotti said previously that completing the cost cutting plan should give UBS an advantage over rivals that are facing the same market challenges but have yet to react to them. He said 2012 would be a year of transition. UBS was one of the worst hit banks during the subprime mortgage crisis of 2007, and has since faced other difficulties. The bank's private banking operation in the United States was at the center of a legal dispute and in September, the bank uncovered a $2.3 billion loss from unauthorized transactions at its London equity unit, prompting the departure of Mr. Ermotti's predecessor. For the full year, the entire bank had a profit of 4.2 billion francs compared to 7.5 billion francs in 2010.