New UBS boss seeks fresh start after trading scandal

ZURICH Sat Sep 24, 2011 7:05pm EDT

1 of 3. Oswald Gruebel, CEO of Swiss Bank UBS addresses a news conference to present the results for 2010 in Zurich February 8, 2011.

Credit: Reuters/Arnd Wiegmann

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ZURICH (Reuters) - The new interim boss of UBS faced a daunting task on Sunday as he tries to get the Swiss bank back on its feet after Oswald Gruebel quit as chief executive over the $2.3 billion loss it ran up in alleged rogue trading.

Sergio Ermotti 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.

A 51 year-old from Switzerland's Italian-speaking region of Ticino, Ermotti 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 capitalized 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 $50 billion lost on toxic assets.

UBS shares fell more than 10 percent 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 percent 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 bank should conclude in 10 to 14 days although UBS might not be able to disclose its findings, pending external probes.

OPPORTUNITY OUT OF DISASTER

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 unauthorized 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.

(Additional reporting by Steve Slater in London; Editing by John Stonestreet)

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Comments (4)
JoeObserver wrote:
When UBS made huge losses in 2008 financial crisis, there was pressure from investors community that UBS should shut down its investment banking unit completely and focus on its core competencies. But UBS never listened , as a result you are seeing this. Perhaps Grubel would have been in his position , had the investment banking unit closed years ago.

Sep 24, 2011 8:06am EDT  --  Report as abuse
shleffy wrote:
Joe – Monday morning quarterbacking. You don’t shut down the entire division – that’s not only many thousands of jobs lost, I-banking contains many units within, other than trading. Why shut down when there are clients who want to do business ?

Sep 24, 2011 12:42pm EDT  --  Report as abuse
NedStark wrote:
“Oswald Gruebel resigned on Saturday as chief executive of troubled Swiss bank UBS, saying he took the blame for the $2.3 billion loss run up in alleged rogue trading in its investment banking division.”

I’ll bet that this guy retires (again) with a nice fat compensation package. The “big guys” in global banking/gambling institutions may occasionally “take the blame” for their failure to manage competently…but they always seem to land on a soft, fluffy cushion of dollars (or Euros, in this case).

If this guy weren’t so old, I’d bet my next paycheck that he could land another well-paying gig at another investment bank. These guys never learn their lessons (well, other than that they can always count on the rest of the world to suffer the losses resulting from their incompetence).

That photo is a classic, too. Would you trust your hard-earned savings with this guy? Hilarious.

Sep 24, 2011 5:21pm EDT  --  Report as abuse
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