Sergio Ermotti, the lender's newly installed CEO, detailed the plans in a Thursday, Nov. 17, presentation to investors in New York, during which he also lowered the bank's profit forecast. UBS now aims for a return on equity of 12%-17%, versus a previous goal of 15%-20%.

Ermotti said that UBS would reduce its balance sheet by 145 billion Swiss francs ($157 billion), with risk-weighted assets in the investment bank falling nearly 50%. Along with other big European lenders, UBS is bracing for new Basel III regulations, which require big banks to hold greater and higher-quality capital reserves. UBS targets a common equity tier 1 ratio of 13% under Basel III.

"We have chosen to substantially reduce the risk profile of the bank by exiting and downsizing businesses which are not value added to our client franchise or deliver unattractive risk-adjusted returns. The Board and I are convinced that this strategy plays to our strengths," Ermotti told investors.

Ermotti took the top job at UBS after former CEO Oswald Grubel resigned in September in the wake of a rogue trading scandal that cost the bank $2.3 billion.

UBS plans significant cuts at the bank's capital-heavy FICC (fixed income, currencies and commodities) unit. "We will not be concerned about league table status," Ermotti said. The bank will wind down its asset securitization unit -- the business at the heart of the financial crisis -- and eliminate about 2,000 jobs by the end of 2016.

Ermotti insisted that profitable units, including the wealth management group, with nearly $1.5 trillion in assets under management, would receive the investment and support they need. "The story is not all about shrinking," he said.

The wealth management business in the U.S. is on track to deliver an annual pre-tax profit of $1 billion, UBS said in a statement.

Ermotti also told investors that the bank plans to pay a dividend of 0.10 Swiss francs this year.