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UBS chief quits over rogue trading loss
Oswald Gruebel, Swiss chief executive, resigns after scandal that reveals "unacceptable" risk exposure at the bank.
Last Modified: 25 Sep 2011 02:27
UBS CEO Oswald Gruebel resigns over $2.3bn loss caused by rogue trading at its investment division [Reuters]

UBS chief executive Oswald Gruebel has resigned over a $2.3bn loss caused by rogue trading at its investment division, which is to be restructured now to prevent similar incidents in future, the Swiss bank said.

Sergio Ermotti, the new interim boss, said on Saturday the scandal had revealed a risk exposure that was "totally unacceptable" and his first priorities would be to review the bank's controls and conclude an internal investigation into the losses.

Ermotti, a 51-year-old from Switzerland's Italian-speaking region of Ticino,  was being groomed as a possible successor at the helm since he joined UBS as head of Europe, Middle East and Africa in April from UniCredit.

"We are aware that we are facing turbulent times externally and this latest incident is only adding much more necessity for us to react. But let's not forget that UBS is one of the best capitalised banks worldwide," he told journalists.

Gruebel, a 67-year-old banking veteran who helped turn around rival Credit Suisse last decade, was brought out of retirement to try to revamp UBS after it almost collapsed in 2008 under the weight of more than $50bn lost on toxic assets.

"As CEO, I bear full responsibility for what occurs at UBS," he said in a memo to staff.

"From my first day on the job I placed the reputation of the bank above all else. That is why I want to and must act according to my convictions."

Shares stabilised

UBS shares fell more than 10 per cent since the news broke on September 15, trading at their lowest level since shortly after Gruebel took over in early 2009, but they rose 4.8 per cent on Friday on hopes the board would agree a major restructuring.

Ermotti, who Chairman Kaspar Villiger said was a strong candidate to replace Gruebel permanently, said an internal investigation of what went wrong with the bank should conclude in 10 to 14 days although UBS might not be able to disclose its findings, pending external probes.

The board asked Ermotti to speed up a scaling back of the investment bank, which he said would be detailed at an investor day already planned for November 17 in New York.

Villiger said he had no doubts about the future of investment bank head Carsten Kengeter, whose fate had also hung in the balance, saying he and his team had done an "excellent job" to limit losses from the unauthorised trades.

Villiger declined to comment on whether Kengeter could still be a candidate to take over as CEO, saying only the board was looking at both internal and external candidates and should decide on a permanent replacement within six months.

UBS had already said in August it would axe 3,500 more jobs to shave 2 billion Swiss francs off annual costs, with almost half from the investment bank, which had grown to almost 18,000 staff as Kengeter tried to rebuild the battered franchise.

Source:
Agencies
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