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UBS chief exec Oswald Gruebel resigns amid scandal

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UBS chief exec Oswald Gruebel resigns amid scandal

By Ritika Sharma Subscribe to RSS | December 15th 2011 | Views:
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UBS chief executive Oswald Gruebel resigned Saturday, after taking the blame for an estimated loss $2.3bn (£1.5bn) caused by unauthorized speculative trading at its London-based investment banking unit.

The board announced Sergio Ermotti would take over as interim chief executive with immediate effect while they evaluate internal and external members to replace Gruebel. UBS plans to shrink operations in its investment banking division, to prevent the element of risk in trading activities and protect private investors' wealth. The bank is facing a lot of flak for failing to catch the massive loss that is likely to wipe out UBS's quarterly profits.

UBS board president Kaspar Villiger stated, “Oswald Grübel feels that it is his duty to assume responsibility for the recent unauthorised trading incident. It is testimony to his uncompromising principles and integrity. During his tenure, he achieved an impressive turnaround and strengthened UBS fundamentally. He steps down having helped make UBS one of the world’s best capitalised banks.”

Meanwhile, in order to win over investors and prevent similar incidents in future, some substantive changes in the leadership and risk-management policies are underway at the Swiss bank.

$2 billion loss at UBS:- UBS was stunned earlier this month when losses to the tune of $2 billion were discovered because of unauthorized trading by 31-year-old equities trader Kweku Adoboli in London.

Kweku Adoboli was arrested last week and is charged with fraud and false accounting. He has been remanded in custody until 20 October and has made no application for bail.

The bank is facing a lot of flak for failing to catch the massive loss that is likely to wipe out UBS's quarterly profits.

In a memo to the staff Gruebel stated, “That it was possible for one of our traders in London to inflict a multibillion loss on our bank through unauthorized trading shocked me.

“This incident has worldwide repercussions, including political ones. I did not take the step of resigning lightly. I am convinced that it is in the best interests of UBS to approach the future with a new leader at the top.”

Restructuring of investment bank:- Meanwhile, in order to win over investors and prevent similar incidents in future, some substantive changes in the leadership and risk-management policies are underway at the Swiss bank. UBS plans to shrink operations in its investment banking division, to prevent the element of risk in trading activities and protect private investors' wealth. UBS was stunned earlier this month when losses to the tune of $2 billion were discovered because of unauthorized trading by 31-year-old equities trader Kweku Adoboli in London.

he board announced Sergio Ermotti would take over as interim chief executive with immediate effect while they evaluate internal and external members to replace Gruebel. In the media statement Villiger said, “In the future, the investment bank will be less complex, carry less risk and use less capital to produce reliable returns and contribute more optimally to UBS’ overall objectives.”

Ritika Sharma - About Author:
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