The recent loss of $2.3 billion at UBS due to an unauthorised trade has claimed its first major victim with the resignation of Group CEO Oswald J. Grübel. The board of directors at the bank yesterday accepted Grübel’s resignation. In a statement issued today, the board said Sergio Ermotti has taken over as the Interim Group CEO.
Though Grübel accepted moral responsibility for the massive loss the bank had suffered, it did come as a surprise to company insiders. A source in the City said Grübel was known for his rapport with Swiss financial regulator FINMA. “Regulation is seldom a one-way street. Grübel’s network with FINMA will be grossly missed at UBS.”
In a statement today, UBS’s Chairman Kaspar Villiger said: “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.”
On September 15 the news of a rogue trader exposing the bank to a loss of $2.3 billion sent shockwaves across the financial world. The 31-year-old Kweku Adoboli working for UBS’ exchange traded fund confessed to his bosses of the loss caused by him and was arrested by the City of London police. He was later charged with fraud and is now held in judicial custody. Both UBS and the police are conducting independent investigations. In a note to his colleagues on September 18, Grübel said: “Ultimately, the buck stops with me. I and the rest of senior management are responsible for dealing with wrongdoing.”
At this stage it is not clear if more heads will roll at UBS. City grapevine went on an overdrive on possible overhaul in UBS management. Questions were raised on the failure of the system to spot unauthorised trade early enough to avoid such losses. So far the incident has not claimed any heads in the group’s risk team, particularly Maureen Miskovic, the Chief Risk Officer (CRO).
A company spokesperson said Grübel will be the only loss and the rest of the top management team stays intact.
The management at UBS has also vowed to correct systemic flaws to avoid any more loss of such magnitude. Villiger in the media statement 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.”
