September 27, 2011 / 9:42 AM / in 6 years

GIC supported UBS ex-CEO Gruebel's strategic plan - source

SINGAPORE, Sept 27 (Reuters) - UBS AG's largest shareholder supported former chief executive Oswald Gruebel's strategic plan for the bank and believed he could have stayed on to manage it through the latest crisis, a source with direct knowledge of the matter said on Tuesday.

The faith of Government of Singapore Investment Corp Pte Ltd , the city-state's sovereign wealth fund, in UBS's departed CEO underscores the complexity of Gruebel's resignation and reveals the extent to which a variety of internal and external factors, including political pressure, played a role in his exit.

Gruebel resigned over the weekend as UBS management grappled with a rogue trading scandal that cost the bank $2.3 billion and readied a plan to steady the struggling bank.

GIC's support of Gruebel until the very end also shows that while his leaving may have satisfied some shareholders, it hardly reassured the Singapore fund, which owns 6.4 percent of the bank.

"GIC believed he had good plans," said the source, who added that GIC was concerned about what the leadership changes would do to the bank's future strategy.

"Gruebel succumbed to Swiss national pressure," added the source, who was not authorised to speak publicly about the matter.

The source reiterated GIC's recent stance that UBS was a well-capitalised bank with a strong private wealth management business, a signal that the sovereign investor was not preparing to sell out of its holding.

GIC declined to comment. UBS was not immediately able to be reached. (Reporting by Saeed Azhar; Editing by Michael Flaherty and Chris Lewis)

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