Aug. 11 (Bloomberg) -- UBS AG, Switzerland’s largest bank by assets, hired more than 20 senior bankers from competitors including Merrill Lynch & Co. and Goldman Sachs Group Inc. to strengthen its fixed-income division.

The hires include Dimitri Psyllidis, formerly at Merrill, who joined Zurich-based UBS to head foreign exchange and rates trading globally, according to a memo sent to staff yesterday. He will report to Carsten Kengeter and Jeffrey Mayer. Bobby Gerjarusak joined in Hong Kong from Goldman Sachs to run fixed- income, currency and commodities structuring in Asia-Pacific.

UBS, the European bank with the biggest losses from the global credit squeeze, aims to become a leader in fixed income, currencies and commodities, “as measured by profitability, client ranking and market share,” said the memo from Kengeter and Mayer, who jointly head that business.

UBS was alone among the biggest investment banks in reporting negative revenue, of 59 million Swiss francs ($54.5 million), from trading bonds, currencies and commodities in the second quarter, according to data compiled by Bloomberg. Rebuilding this business may take nine more months, Chief Executive Officer Oswald Gruebel said last week.

In April, Gruebel tapped Alexander Wilmot-Sitwell and Kengeter as co-heads of the investment bank to replace Jerker Johansson, who held the role for 13 months.

A UBS spokesman in London confirmed the contents of the memo and said the hiring occurred over the past few months. The Financial Times reported the hiring earlier today.

Swiss Pay Plan

Recent hires in the U.K. included Andrew Crowston and Pablo Terpolilli, both formerly at Goldman Sachs, and Steve Murphy from Deutsche Bank AG, according to the memo.

The Swiss bank hired Rajeev Misra, who previously worked for Deutsche Bank, as global head of credit trading in May. His role will also broaden to co-head of emerging markets with Ritesh Dutta, the memo said.

UBS’s hiring comes as the Swiss government considers how to rein in pay for bankers. Switzerland’s upper house of parliament rejected a proposal today aimed at limiting executive pay at UBS, after record losses at the bank forced the government to invest 6 billion Swiss francs in the lender and set up a $39 billion fund for toxic assets.

The measure would have forced UBS to introduce executive pay in line with state-owned companies for the duration of the government’s involvement. The proposal on executive pay will be passed back to the lower house of parliament for discussion as soon as next month as both chambers seek a compromise.

Pay Policies

The Swiss Financial Market Supervisory Authority proposed new compensation guidelines for financial services companies in June, which aim to align pay policies better with long-term profitability and take into account risks. The deadline for feedback on the suggestions is on Aug. 14 and the publication of definitive guidelines is expected in September, the agency said.

“I expect that we must and will come to a solution here,” Finance Minister Hans-Rudolf Merz told lawmakers today, commenting on the question of compensation policies. The financial regulator “has to act with regards to salary structure rather than just with regards to a cap, which alone wouldn’t bring a solution to the problem.”

To contact the reporter on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net

Last Updated: August 11, 2009 08:25 EDT