UBS CEO Resigns after Rogue Trading Scandal

UBS AG (NYSE: UBS) CEO, Oswald Gruebel, resigned on Saturday following the rouge trading scandal that led to a $2.3 billion at Switzerland’s largest bank. Gruebel, who previously worked at Credit Suisse (NYSE: CS), joined UBS after the bank almost two half years ago.

Gruebel had revived the fortunes of Credit Suisse and was expected to do the same at UBS, which suffered huge losses during the financial crisis of 2008 and was bailed out by the Swiss government. However, the bank has largely underperformed under Gruebel.

In an email to UBS staff on Saturday, Gruebel said that he did not take the step of resigning lightly and that he is convinced that it is in best interests of UBS to approach the future with a new leader. Gruebel also said that rouge trading scandal had global repercussions, including political one.

The scandal has once again highlighted the need for having stricter regulations for banks. There have also been calls for big banks like UBS to exit the investment banking business completely.

UBS, meanwhile, reiterated on Saturday at a Board meeting in Singapore that it has sufficient capital to cover for the losses due to the unauthorized trading scandal.

UBS Chairman Kaspar Villiger said that the bank’s top priority now is to overhaul its investment banking unit. The Swiss bank is likely to scale back its risky investment banking unit. The investment banking unit is headed by Carsten Kengeter, who is likely to stay at the bank despite the rouge trading scandal.

Chairman Villiger said that it may take the bank up to six months to find a new CEO. The bank has appointed Sergio P. Ermotti, who heads Europe, the Middle East and Africa region, as the interim CEO. In an email to staff, the UBS Board said that Gruebel achieved an impressive turnaround and strengthened the firm fundamentally, making UBS one of the world’s best capitalized banks. Ermotti said that his top priority as interim CEO would be to review the bank’s level of operation risk.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.