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New UBS boss seeks fresh start after trading scandal

Sep 24, 2011, 4:05 p.m.
Sergio Ermotti speaks during an interview with Reuters in downtown Milan July 14, 2010. REUTERS/Stefano Rellandini

By Emma Thomasson and Catherine Bosley

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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