UBS CEO rejects calls to resign

Associated Press

GENEVA

Oswald Gruebel, the chief executive of UBS, has dismissed calls for his resignation as politically motivated, even as the Swiss banking giant raised its rogue- trading loss to $2.3 billion.

UBS AG previously had put the loss at $2 billion when news of the scandal first broke Thursday.

In a bid to reassure investors, the Zurich-based bank said Sunday it has “now covered the risk resulting from the unauthorized trading” and its equities business “is again operating normally within its previously defined risk limits.”

UBS also confirmed for the first time that the trader, 31-year-old Kweku Adoboli, already was under investigation by the bank when he revealed his actions to authorities Wednesday.

“The loss resulted from unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months,” UBS said, adding that the magnitude of the bank’s risk exposure was hidden by fake trades.

Adoboli remains in custody in London, charged Friday with acts of fraud and false accounting dating back to 2008. His next court appearance is Thursday.

The fact that the fraud took place over three years raises serious questions about the bank’s ability to manage its risk. UBS said it has set up a special committee chaired by David Sidwell, the bank’s senior independent director, to investigate the incident.

Speaking for the first time since UBS revealed the loss, Gruebel told the Swiss weekly Der Sonntag that the loss couldn’t have been prevented.

“If someone acts with criminal energy, then you can’t do anything. That will always be the case in our business,” the former trader said in the interview published Sunday.

But some Swiss politicians and commentators have called for Gruebel’s head to roll over the loss, which is likely to put UBS’ third-quarter results deep in the red. Such a move would signal defeat for the gravel-voiced German, who was brought in more than two years ago to revive the bank’s fortunes after a series of missteps that included vast losses in the U.S. subprime mortgage market and an embarrassing U.S. tax-evasion case.

Gruebel told Der Sonntag that he has no intentions of resigning.

“I’m responsible for everything that happens at the bank,” Gruebel told the paper.

“But if you ask me whether I feel guilty, then I would say no.”