SEARCH

Entries in Switzerland (5)

Saturday
Sep242011

UBS CEO Resigns Over $2.3 Billion Rogue Trading Loss 

Sebastian Derungs/AFP/Getty Images(LONDON) -- UBS chief executive Oswald Gruebel has resigned over a $2.3 billion rogue trading loss, the Swiss bank announced Saturday, ending days of speculation.

The board of directors asked UBS Europe chief Sergio P. Ermotti to take over immediately as interim CEO until Gruebel's replacement is appointed, the bank said in a statement.

"The Board regrets Oswald Gruebel's decision," UBS Chairman Kaspar Villiger said, according to the statement.

"Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorized trading incident. It is testimony to his uncompromising principles and integrity," Villiger said.

Villiger thanked Gruebel on behalf of the board of directors for "having helped make UBS one of the world's best capitalized banks."

"He achieved an impressive turnaround and strengthened UBS fundamentally," Villiger said.

London-based UBS securities trader Kweku Adoboli, 31, was arrested last week and charged with fraud and false accounting for the unauthorized trades, which led to a $2.3 billion loss. On Thursday, a judge ordered him to be held in jail until a hearing next month.

Adoboli started working for UBS as a trainee investment adviser in March 2006 and has had no disciplinary action taken against him previously, according to the Financial Services Authority register of advisors, as reported by the Press Association.

Erin Davis, senior stock analyst with Morningstar, said it seems Adoboli worked in the back office until he was promoted to the trading floor, which points to "below average" risk controls at the bank.

"A lot of banks won't allow that kind of promotion explicitly to avoid creating this kind of opportunity. It appears that the trader, because of his back office experience, was able to bypass the risk management systems," she said.

According to the statement, the board of directors will implement measures to prevent such incidents from reoccurring.

"We are committed to further expanding our already leading global wealth management franchise. The Investment Bank will continue to strengthen its alignment with UBS's wealth management businesses, in addition to serving its corporate, sovereign and other institutional clients," Villiger 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's overall objectives."

During the financial crisis, UBS lost nearly 30 billion Swiss francs, or $34.5 billion, and had to be bailed out due to its investments in low-quality assets, especially U.S. subprime mortgages. As a result, UBS raised more than $5 billion from the Swiss government and it was permitted to transfer up to $60 billion in distressed assets to a fund supported by Switzerland's central bank.

Davis said UBS' private bank is its "crown jewel," and its main challenge in recent years has been to regain its clients' trust, but it has had only "moderate success." The bank's net new asset inflows, while now positive, are weak relative to its competitors.

Copyright 2011 ABC News Radio

Monday
Sep192011

Bailed-Out UBS Trading Incident Could Lead to More Regulation

SEBASTIAN DERUNGS/AFP/Getty Images(LONDON) -- After a securities trader was arrested and charged in London in connection with $2.3 billion in rogue trades at Swiss bank UBS, analysts have warned that more regulation is pounding its fist on bank doors.

With already fragile confidence in UBS, Switzerland's largest bank, critics point to the fact that UBS was the beneficiary of a bailout on the other side of the Atlantic.  In the U.S., the Treasury stepped in with a $700 billion bailout of all the major banks during the financial crisis in 2008.  New regulations followed here and in the United Kingdom in an effort to stem future taxpayer bailouts.

Kweku Adoboli, 31, was arrested on Thursday on suspicion of fraud and is still in police custody, according to the British newswires of the Press Association.  He was charged on Friday with fraud and false accounting for the unauthorized deals.

Adoboli started working for UBS as a trainee investment adviser in March 2006 and has had no disciplinary action taken against him previously, according to the Financial Services Authority register of advisors, as reported by the Press Association.

Erin Davis, senior stock analyst with Morningstar, said it seems Adoboli worked in the back office until he was promoted to the trading floor, which points to "below average" risk controls at the bank.

"A lot of banks won't allow that kind of promotion explicitly to avoid creating this kind of opportunity.  It appears that the trader, because of his back office experience, was able to by-pass the risk management systems," she said.

During the financial crisis, UBS lost nearly 30 billion Swiss francs, or $34.5 billion, and had to be bailed out due to its investments in low-quality assets, especially U.S. subprime mortgages.  As a result, UBS raised over $5 bilion from the Swiss government and it was permitted to transfer up to $60 billion in distressed assets to a fund supported by Switzerland's central bank.

With the news of the rogue trader last week, Davis said more regulation is likely on its way.

Davis said the most obvious solution to prevent unauthorized trades, or other potentially risky situations for investment banks, would be for Switzerland to require its banks to "ringfence" its retail or "plain-vanilla" commercial banking operations from its investment bank, as the U.K. is trying to do.

The U.S. is also implementing a similar policy after the Dodd-Frank Act passed the Volcker rule.  That policy prohibits American banks from executing particular speculative investments that could harm their customers.

Copyright 2011 ABC News Radio

Thursday
Sep152011

Did Single Trader Cost UBS $2 Billion? Arrest Made in London

SEBASTIAN DERUNGS/AFP/Getty Images(LONDON) -- A 31-year-old man has been arrested in connection to UBS' announcement that a single trader may have cost the bank an estimated $2 billion.

The man, who has not been identified, was detained in London Thursday morning.

That same day, the Swiss bank said in a statement that "unauthorized trading by a trader in its Investment Bank" resulted in the 10-figure loss.

UBS noted that the amount lost could change since the matter was still under investigation, and warned that the deficit could lead it to report a loss when its third quarter figures come out for the year.

The bank did not offer any further details but said that "no client positions were affected."

Copyright 2011 ABC News Radio

Tuesday
Aug232011

Swiss Bank UBS to Cut 3,500 Jobs

SEBASTIAN DERUNGS/AFP/Getty Images(ZURICH) -- UBS AG announced Tuesday that it will be cutting around 3,500 positions in an effort to help reduce its expenses by 2 billion Swiss francs, or $2.5 billion, each year.

The Swiss bank said the job cuts "will be achieved through redundancies as well as natural attrition."

Nearly 45 percent of the staff reductions will come from UBS' investment bank business, while 35 percent will come from its wealth management and Swiss bank business.  The remaining 20 percent will be divided evenly among the bank's global asset management unit and its wealth management Americas unit.

UBS hopes to achieve its savings by the end of 2013.

Copyright 2011 ABC News Radio

Saturday
May282011

US Dollar Continues Two Week Low over Sour Speculation

Photos.com/Thinkstock(WASHINGTON, D.C.) -- The dollar continued its two week descent as reports suggesting the U.S. economy's economic recovery may be hitting a plateau.

The Swiss franc rose sharply this week, benefiting from the supposedly stagnating dollar and worries over Greece's debt crisis. The Dollar Index dropped from 75.435 last week to 74.758.

New Zealand's currency grew stronger after the China Investment Corp. announced plans to buy kiwi bonds.

Copyright 2011 ABC News Radio







ABC News Radio