A bitter U.S. tax row has hit UBS harder than many investors thought and the Swiss wealth management giant is still losing more rich client money than what it manages to attract, its disappointing third-quarter results showed.

UBS shares tanked and the data suggest turnaround maestro Oswald Gruebel may have to work a bit harder to bring home the profit that will convince the super rich to stick around.

“Reputation is a fragile dimension, painstaking to build but easily broken. It will take a more than persuasive convincing for wealthy clients to fully perceive the firm as a safe haven again, even though there are positive shoots of normality returning,” said Cubillas Ding, senior analyst at international financial research and consulting firm Celent.

Will the arrival of Merrill Lynch veteran Robert McCann, hired to restore trust in UBS’ battered American wealth franchise, improve things?

Photo credit: The U.S. flag flies outside the U.S. headquarters of Swiss bank UBS in New York August 4, 2009.  REUTERS/Brendan McDermid (UNITED STATES BUSINESS)