Oswald Grübel, the embattled chief executive of Switzerland’s UBS bank, has stepped down in the wake of a rogue trading scandal, the bank announced on Saturday.
Grübel had been under pressure since it became known on September 15 that a London-based UBS investment bank trader had lost the bank $2.3 billion (SFr2.09 billion).
“The board regrets Oswald Grübel’s decision. Oswald Grübel feels that it is his duty to assume responsibility for the recent unauthorized trading incident,” said UBS chairman, Kaspar Villiger, in a statement on the bank’s website.
“During his tenure, he achieved an impressive turnaround and strengthened UBS fundamentally. He steps down having helped make UBS one of the world’s best capitalised banks. On behalf of the Board of Directors, I extend my heartfelt gratitude to him for everything he has done for UBS.”
The bank’s board met in Singapore on Thursday and Friday for what was supposed to be a two-day meeting. Although some members then left the country, they continued their discussions by conference call on Saturday, in what Switzerland’s TagesAnzeiger newspaper said was probably an indication of a power struggle.
Grübel had told Swiss newspapers on Sunday that he would not step down, and he repeated this to journalists when he arrived in Singapore on Wednesday.
When he left the board meeting on Friday, he declined to comment on his future.
It is known that Singapore sovereign wealth fund GIC, the bank’s largest shareholder, met the management ahead of the board meeting, and expressed its “disappointment” and called for firm action to restore confidence.
But bank spokesman Jean-Raphaël Fontannaz told French-language Swiss radio that Grübel’s decision had been a “personal” one, and not the result of shareholder intervention.
The Swiss News Agency quoted an internal mail sent by Grübel to bank workers to explain what he described as his “tough” decision to resign.
“I am convinced that it is best for UBS to move into the future with a new leader,” he wrote.
He said it was clear that he bore full responsibility for everything that happened at UBS.
“From the very first day the bank’s reputation was all important to me. I must and will therefore be consistent. My resignation will, I hope, enable our customers, investors and the broad public to refocus their attention again sooner on the qualities and strengths of our bank.”
In a conference call with journalists, Villiger said the board had tried to convince Grübel to stay until next year‘s annual shareholder meeting, but that Grübel had wanted to send “a strong signal” about the trading loss straight away.
“He thinks that this act could maybe create a new basis for UBS to continue,” said Villiger.
He told the journalists the bank wanted “to turn this disaster into an opportunity.”
UBS announced that Sergio P. Ermotti , head of Europe, Middle East and Africa, would replace Grübel in an acting capacity, with immediate effect.
Ermotti’s name had been one of those mentioned by commentators as a possible successor to Grübel. Other names have also been in the air, in particular Hugo Baenziger, chief risk officer at Deutsche Bank and Axel Lehmann, his counterpart at Zurich Financial.
Villiger said the search for a permanent successor would continue. The board was looking at internal and external candidates, and expected to make its decision within the next six months.
But he said that Ermotti was a “strong candidate” for the permanent job.
Meanwhile, Ermotti would continue to implement the bank’s “integrated strategy”, promoted by Grübel, which combines wealth management, investment bank, asset management and Swiss retail and corporate businesses.
However, the board intends to restructure investment banking, making it less complex and carrying less risk.
It will “use less capital to produce reliable returns and contribute more optimally to UBS’s verall objectives,” Villiger’s statement said.
Grübel, who took over in 2009 when the bank was in deep trouble, had placed the investment bank at the heart of his recovery strategy.
The bank is due to announce its future strategy to investors on November 17.
The UBS board said it was “deeply disappointed” by the trading scandal, and stated that it would “fully support the independent investigation and will ensure that mitigating measures are implemented to prevent such an incident from recurring”.
The lawyer for the trader involved told a London court on Thursday that his client was “sorry beyond words for what had happened” and was “appalled at the scale of the consequences of his disastrous miscalculations”.
The board has said nothing about whether Carsten Kengeter, head of the investment bank, will keep his job. However, Villiger told journalists he saw no reason “to doubt the future of Carsten Kengeter”.