UBS is the first bulge bracket investment bank to make drastic strategic changes since the financial crisis, but few would bet on it being the last. Other banks, notably European rivals Deutsche Bank and Barclays, are breathing a sigh of relief at the retreat of a competitor in a number of markets, but sources say they are also watching closely to see if UBS’s gamble pays off.

The Zurich-based bank said on October 30 that it was largely withdrawing from fixed income trading, reducing its funded balance sheet by Sfr300 billion ($319 billion) or a third over three years, and cutting headcount across the group by 10,000 or 16 percent of the total. Some 2,000 front office investment bankers will be axed. It’s a bold step.

“There has to be an element of doubt about whether you can run a successful investment banking division and equities business without fixed income, but strategically it makes sense to allocate capital to the strongest parts of the bank such as wealth management,” says Andrew Stimpson, banks analyst at Keefe, Bruyette & Woods in London. This is a doubt shared by former group CEO Oswald Grubel, who told Institutional Investor in an interview in February 2011, “you cannot run a global bank without something as basic as fixed income trading.”