Germany, Europe's largest economy, has proved to be a tough nut to crack for Swiss banks, including Switzerland's biggest, UBS. The bank, which offers wealth management, asset management and investment banking services at eight branches in Germany, reported a loss of 80 million euros for 2014, the biggest in ten years.

Thomas Rodermann (pictured below) replaced Axel Hörger as head of the German unit in April. Yesterday, he sent a letter to his 800 employees, telling them how UBS Germany will return to a sustainable growth path.

Growth After Cutbacks

«Following the restructuring of the past years, now is the right time to set in motion a phase of profitable growth in our German business,» Rodermann said in the letter. UBS over the past two years reduced the number of branches in Germany and fired some of its employees.

In his letter, Rodermann doesn't specify how he wants to grow the business, where he aims to invest and how many new bankers he will employ.

It is obvious that his plan for Germany is closely in line with the strategy for UBS as a whole. Wealth management is the core business, with investment banking lending support. The business is fed with products by the asset management unit.

Efficiency Gains

UBS needs to hire additional client advisers, the letter to the German workforce shows. The bank also envisages investments in marketing and digitalization. Rodermann writes that the bank needs to improve its efficiency, especially in the back and middle offices, streamlining procedures, cutting back on red tape and using the digital technologies.

Following the cost cuts in the past years, UBS Germany has become more profitable. The loss of 2014 is mainly attributable to a provision made in the Madoff fraud case. The UBS core wealth management business is back on a growth path following the closure of branches and assets under management already increased 13 percent last year.

Strong Domestic Contender

UBS doesn't say how much money it manages in Germany, but people close to the bank estimate that the wealth management unit is in charge of some 30 billion euros.

Rodermann and his crew will have to make inroads into the market share of competitors if the growth plan is to be successful. UBS has a strong contender from its own home market to ward off: Julius Baer also has eight branches in Germany after the takeover of Merrill Lynch. It may have posted a loss last year, but reach profitability on operative level.