Last checked at 
* Knight Vinke says now is the time to discuss break-up
* UBS says will address investor views at its AGM
* One top ten investor dismisses call for outright break-up
By Katharina Bart and Sinead Cruise
ZURICH/LONDON, May 2 (Reuters) - UBS faced a freshcall to separate its investment banking operations and wealthmanagement division at an investor meeting on Thursday, afteractivist investor Knight Vinke Asset Management demanded areview of the Swiss bank's structure.
The surprise intervention by New York-based Knight Vinkecomes six months after UBS decided to pull out of the most riskyareas of investment banking and just days after first-quarterresults beat expectations, giving investors some reassurancethat the strategy was working.
One top ten shareholder dismissed Knight Vinke's argumentthat UBS's investment bank was holding back its wealthmanagement arm, which attracted the most customer money in sixyears in the first quarter of this year.
"I would not buy the argument that one side is preventingthe other side from reaching full potential. For sure, there wasa phase where that was the case because of the way theinvestment bank was run but to me, UBS is learning from pastmistakes and is moving forward," said the investor, who declinedto be named.
UBS said it would listen to the arguments and ideas of itsshareholders and discuss them at the annual general meeting,which was being held on the outskirts of Zurich.
Switzerland's largest lender has opted to stick with apared-back version of the so-called universal banking model inthe wake of a slew of trading scandals and huge losses arisingfrom the 2007-09 financial crisis, withdrawing from most areasof fixed income and axing 10,000 staff.
A previous campaign to radically restructure UBS by formerpresident Luqman Arnold fell apart when Lehman Brotherscollapsed in September 2008. Arnold's investment fund's stake inUBS was held by Lehman Brothers meaning he could not access theshares when the U.S. investment bank went bust.
Shares in UBS were down nearly one percent at 16.44 Swissfrancs, underperforming a flat European banking index.
RISKS
Knight Vinke has made a name for itself by targetingcorporate titans, including a high-profile two-year campaignagainst HSBC's U.S. consumer finance business, and advises someof the world's largest pension funds and sovereign wealth funds.
In a letter in Thursday's Financial Times newspaper, itschief executive Eric Knight said UBS's investment bankingactivities still posed risks for its wealth management arm andtheir union was preventing each from reaching full potential.
"It is argued that the investment bank brings cross-sellingopportunities to the wealth management business - and to alimited extent this may be true. However, whatever benefitsthere may be need to be viewed in the wider context of the risksthat the investment bank brings to the group as a whole."
Knight Vinke, which owns just less one percent ofSwitzerland's largest bank, said the best owners of UBS'sinvestment bank were probably its management and employees.
"This is a discussion that is best had when all thebusinesses are doing well - as is the case today - and the boardneeds to be encouraged to act quickly and decisively so as notto lose the opportunity," it said.
