UBS CEO quits over trading loss

Sep 24, 2011, 10:03 a.m.
Oswald Gruebel, CEO of Swiss Bank UBS addresses a news conference to present the results for 2010 in Zurich February 8, 2011. REUTERS/Arnd Wiegmann

By Emma Thomasson and Catherine Bosley

ZURICH (Reuters) - 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.

The bank, which said it would beef up risk controls under an accelerated restructuring of that part of its business, named its Europe, Middle East and Africa head Sergio Ermotti -- only at UBS since April -- to replace Gruebel on an interim basis.

Gruebel, appointed in 2009 to rebuild Switzerland's flagship bank after a near collapse, said in a message to staff that the trading loss announced last week had shocked him deeply.

"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," he said.

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 Chairman Kaspar Villiger said the board of directors, who met in Singapore this week, had not lost confidence in Gruebel despite the scandal and had tried to convince him to stay on to allow a more orderly succession next year.

Chris Wheeler, analyst at Mediobanca said he was "very surprised" the board had agreed to let Gruebel go given the restructuring already under way at the investment bank.

"It certainly puts at risk what they were trying to achieve, given it's a recovery stock and it has had four CEOs now since 2007. It could see a lot of people capitulate on their hope for an early recovery for the stock," he said.

UBS shares fell more than 10 percent since the scandal 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 Villiger said was a strong candidate to replace Gruebel permanently, told a conference call with journalists the bank would review its risk controls at group level, and an internal investigation of what went wrong at the investment bank should conclude in 10 to 14 days.


A 51 year-old from Switzerland's Italian-speaking region of Ticino, he was already being groomed as a possible successor since he joined UBS in April from UniCredit after he was passed over in a management reshuffle at the Italian bank following the departure of CEO Alessandro Profumo.

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 by quickly closing the positions.

He contrasted their actions with hesitation that caused Societe Generale to run up a 4.9 billion euros ($6.6 billion) loss on rogue trades by Jerome Kerviel three years ago that felled that bank's then-chairman and CEO Daniel Bouton.

Editor's Picks

Most Recent