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

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.

Villiger, a former Swiss finance minister who also faced calls to resign over the scandal, said the bank was sticking to plans for former Bundesbank chief Axel Weber to join the board next year and take over as chairman in 2013, adding Weber would be involved in the choice of a new CEO.

He said he did not favor splitting off investment banking from the rest of the bank, but said the board wanted Ermotti to speed up an overhaul of the division to better align it with UBS's core business of managing wealthy clients' money.

"We want to turn this disaster into an opportunity," he said.

Ermotti said more details of changes at the division, which would scale back but not exit its fixed income business and could see limited extra job cuts, would be revealed at an investor day already planned for November 17 in New York.

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.


The alleged rogue trader, Kweku Adoboli, was "sorry beyond words for what had happened" and was "appalled at the scale of the consequences of his disastrous miscalculations," his lawyer Patrick Gibb said at a court hearing in London on Thursday.

The 31-year old did not enter a plea and was remanded in custody until a further hearing next month.

Clients pulled nearly 400 billion Swiss francs ($442 billion) -- almost a fifth of client assets -- from UBS after the bank was battered in the financial crisis to post the biggest annual corporate loss in Swiss history and as it fourght

a prolonged dispute with the U.S. tax authorities.

Villiger said Gruebel had achieved an "impressive turnaround and strengthened UBS fundamentally," but admitted that clients had been scared off by the rogue trading affair.

Gruebel, who had already foregone his bonus for the last two years, would get no severance package as he had resigned.

UBS's largest shareholder, Singapore sovereign wealth fund GIC, met the bank's management earlier in the week and in a rare statement expressed its disappointment. It demanded firm action to restore confidence and details of how the bank would tighten risk controls. It declined to comment on Gruebel's resignation.

GIC had not been consulted over Saturday's management change, Villiger said.

UBS's board meeting, one of four regular ones per year, took place in Singapore ahead of the UBS-sponsored Singapore Formula One motor racing Grand Prix on Sunday, when executives will be trying to reassure big clients.

Asked whether UBS might reconsider its Formula One sponsorship now motor racing fan Gruebel is gone, Ermotti, who flew back to Zurich overnight, said the deal was a long-term commitment so he could not review it even if he wanted to.

In 2007, former UBS CEO Peter Wuffli was ousted at a board meeting in Spain to coincide with the America's Cup yachting event there, in which UBS was sponsoring a team.

($1=0.906 Swiss francs=0.743 euros)

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

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