Mon, Sep 19, 2011 - Page 10 News List

Head of UBS not planning to resign over US$2bn fraud

AFP, GENEVA

The head of Swiss banking giant UBS said yesterday that he did not feel guilty about the US$2 billion rogue trading that occurred in his bank, and that he was not planning to resign over the fraud.

“I am responsible for everything that happens in the bank, but if you ask me if I feel guilty, then I would say no,” Oswald Gruebel, chief executive of the bank, told Swiss newspaper Der Sonntag in an interview published yesterday.

When someone is driven by criminal intent, “you can’t do anything,” Gruebel said.

The chief executive also shrugged off Socialist calls for his resignation as “all political.”

“I am not thinking about resigning,” he added, pointing out that this would be a question for the management board.

Gruebel, a German who was previously at the helm of Credit Suisse, took over the reins of UBS at the height of the financial crisis when the bank was struggling to recover after losing billions of francs and turning to state aid.

He helped to steer the ailing lender from record losses back to profit last year.

However, pressure has been mounting on Gruebel since the unauthorized trades were uncovered on Thursday.

Yesterday, Swiss tabloid Blick ran a headline saying: “Herr Gruebel, time to say goodbye.”

The bank’s honorary chairman Nikolaus Senn told Swiss German television late on Friday that he doubted that Gruebel could stay after the debacle.

Senn said that adequate checks were not implemented and criticized Gruebel for his over-reliance on the controls system to uncover problems.

“I don’t know how many times Oswald Gruebel flew to London in order to understand from the managers on site what was going on,” Senn said.

However, another Swiss newspaper, NZZ am Sonntag, quoted an unnamed member of the management board as saying that Gruebel still enjoys the support of major shareholders such as Singapore’s sovereign wealth fund GIC.

Politicians meanwhile called for an end to the investment banking business, which was also at the root of UBS’ colossal losses in the US subprime crisis.

Former Swiss justice minister Christoph Blocher even suggested banning the business completely.

“We must seriously look at whether one should ban investment banking in commercial banks,” the far-right politician told newspaper SonntagsZeitung.

In London, equities trader Kweku Adoboli, 31, was charged on Friday with fraud and false accounting.

The bank announced the massive loss through unauthorized trading just hours after the trader was arrested at UBS’s London offices on Thursday.

NZZ am Sonntag quoted unnamed sources saying that the losses would be “slightly higher” than the US$2 billion estimate issued on Thursday.

UBS was expected to give further details on the case later yesterday, the paper added.

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