April 1 (Bloomberg) -- UBS AG head Oswald Gruebel hired Ulrich Koerner as chief operating officer to cut administrative expenses, tapping a former colleague who helped him turn around Credit Suisse Group AG six years ago.

Koerner, born in 1962, will replace Walter Stuerzinger and oversee an integration of functions including information technology, human resources and procurement in the corporate center, UBS said today. Koerner headed Credit Suisse’s Swiss business until last year.

Gruebel, the former Credit Suisse chief executive officer who was hired out of retirement in February to turn around UBS after the biggest-ever loss by a Swiss company, told employees they face cost reductions amid an “icy headwind” from market turmoil. UBS has announced 11,000 job cuts and amassed more than $50 billion in writedowns and losses since the beginning of the financial crisis.

“Ulrich Koerner has a very good background in restructuring,” said Teresa Nielsen, an analyst at Vontobel Holding AG in Zurich with a “buy” recommendation on the bank. His appointment is “positive for the future strategy of UBS.”

UBS rose as much as 4.8 percent in Swiss trading and was 16 centimes, or 1.5 percent, higher at 10.86 francs by 12:05 p.m. The stock has risen 7.5 percent since Gruebel was hired to replace former CEO Marcel Rohner, 44, on Feb. 26.

‘Cost Savings’

Koerner will join UBS’s executive board and support Gruebel, 65, and the CEOs of the business divisions in developing and implementing strategy, the Zurich-based bank said. UBS said it plans to bundle all group-wide service and infrastructure units within the division headed by Koerner, creating “the potential for sustainable efficiency increases and cost savings.”

Under Koerner, “the corresponding management and organizational structure will be immediately revised and implemented in an ongoing manner,” UBS said.

Koerner was replaced at Credit Suisse by former UBS executive Hans-Ulrich Meister in September.

UBS posted a 20.9 billion-franc ($18.3 billion) loss for 2008 and said last month it remains “extremely cautious” about the outlook for this year. The losses have forced it to raise more than $32 billion in capital from investors, including the Swiss government.

The bank nominated former Finance Minister Kaspar Villiger, 68, as chairman of its board of directors on March 4, replacing Peter Kurer, 59, after one year amid a probe into whether UBS helped wealthy Americans evade taxes.

To contact the reporter on this story: Christian Baumgaertel in Zurich at cbaumgaertel@bloomberg.net

Last Updated: April 1, 2009 06:40 EDT