Global investors are still reeling from the ongoing and seemingly never-ending losses incurred by Switzerland’s largest bank, Union Bank of Switzerland (UBS). Yet as the Zurich-based bank is chastised by its shareholders and clients, the bank will emerge stronger going forward as it embraces less risk and returns to its core business – banking.

UBS earns the distinctive booby-prize for losses suffered in the subprime and auction rate securities fiasco – responsible for more than 15% of the global total thus far. That sum is north of $50 billion now and probably heading even higher as other structured products and derivative based securities in its clogged portfolio continue to unwind.

In late October, the Swiss National Bank and the Swiss government plugged UBS’s balance sheet by collateralizing over $50 billion dollars worth of distressed and near worthless synthetic securities. This move, in part, was an emergency response to the European Union’s blanket guarantee of deposits starting on October 1, following Ireland’s precedent. Swiss banks don’t offer full deposit guarantees; without some sort of backstop, UBS would have continued to bleed deposits.

Switzerland’s image has been badly damaged by UBS’s misguided investment adventures. The country’s blue-chip reputation was tarnished by the massive write-downs over the last 12 months and many investors have fled the bank, including private banking clients worried about the banks’ solvency until recently.

In retrospect, UBS should have avoided buying U.S. investment banks.

The fist big mistake was acquiring Paine-Weber and Warburg Pincus more than ten years ago. This was the beginning of the end for UBS as it lunged into lucrative but ultimately dangerous investment banking ventures. UBS should have stuck to traditional banking.

UBS will survive. The damage has been enormous since the onset of the credit crisis with several hundred billion dollars lost by global financial institutions. Most banks have been reckless, including UBS. Yet I imagine UBS and other Swiss banks, largely unaffected by misguided adventures in banking, will grow even stronger in the years ahead as Switzerland regains its title as the capital of private banking.

I’ll bet on Switzerland. It’s still the best country in the world to park your assets, including physical gold, which might one day be confiscated by global governments ahead of a new monetary or foreign-exchange regime.