Fears for staff at Swiss bank as Oswald Gr�bel resigns over allegations Kweku Adoboli lost �1.5bn in unauthorised trades
Fears for hundreds of City jobs were raised on Saturday after the dramatic resignation of the boss of UBS, who fell on his sword following the $2.3bn (�1.5bn) alleged rogue trading scandal that has engulfed the Swiss bank and raised calls for a sweeping overhaul of the "casino" investment banking industry.
With Kweku Adoboli, the 31-year-old alleged rogue trader facing four charges of fraud and false accounting still in custody, Oswald Gr�bel resigned to "bear full responsibility for what occurs" at the bank, which employs 6,000 people in the UK.
Gr�bel, hauled out of retirement in 2009 when the bank was crippled by the credit crunch, issued a heartfelt farewell message to staff to explain his resignation, although only a week ago he insisted he did not feel the need to quit.
"That it was possible for one of our traders in London to inflict a multibillion loss on our bank through unauthorised trading shocked me, as it did everyone else, deeply," he said.
Adoboli is yet to enter a plea to the charges ? which date back to 2008 ? that he faces and is next due in the City of London magistrates court on 20 October. A trader on the so-called "delta one" desk, he has not applied for bail.
"This incident has worldwide repercussions, including political ones. I did not take the step of resigning lightly," Gr�bel said.
The bank was adamant that the 67-year-old German would leave with pay for the six months he has worked this year and no more, which amounts to around SFR 1.5m (�1.1m).
Gr�bel's acknowledgement of the worldwide repercussions comes amid calls for investment banks to split off from high street banking operations and the need for investment banks to become less like "casinos" and more focused on their clients.
Politicians in the UK have already used the incident as a reason to implement the recommendations by the Independent Commission on Banking, chaired by Sir John Vickers, to "ringfence" high street banks from investment banks.
On Saturday, UBS pledged to adopt a more "client-centric strategy" and accelerate an ongoing review of its investment banking activities, which could create more jobs in the City. Some 3,500 cuts had been announced across the group even before the trading loss emerged.
Other senior bankers are expected to follow Gr�bel out of the door once the internal investigation into the incident ? which will drive the bank to a loss in the third quarter and caused anxiety among insiders about their bonuses ? is completed in the next 10 days or so, Chairman Kaspar Villiger, who stressed his "regret" at the incident, acknowledged the need for change to adopt to the "new paradigm" in financial markets.
The search is now on for a permanent successor at the bank which had just begun to restore some confidence among investors after $50bn of losses during the credit crunch and a row with the US tax authorities.
Sergio Ermotti, already a director, is to take over for the time being. Careful not to predict the impact on jobs, UBS admitted that "certain business areas" needed to be reviewed . But the board of the bank, which had met in Singapore ahead of the Grand Prix of which UBS is a major sponsor, rejected calls for a full-scale break up and stressed the detail will be presented on 17 November at an investor meeting in New York.
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."
In a memo to staff, Villiger urged them to remain focused. "Please do not allow yourselves to get involved in speculation," he wrote.
He revealed that the board had tried to convince Gr�bel, a veteran and highly regarded banker, not to quit until the annual meeting next year but Villiger said Gr�bel would not stay.
"It is testimony to his uncompromising principles and integrity," he said of the former chief executive who has now returned to Zurich after the meeting in Singapore where he was mobbed by reporters asking him if he intended to quit when he left the nine-hour marathon session on Friday night.
Source: http://www.guardian.co.uk/business/2011/sep/24/ubs-jobs-ceo-quits-scandal
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