UBS CEO Gruebel Resigns, Leaving Swiss Bank in Disarray

by CFO Innovation Staff, 26 September 2011

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Tom Naratil, CFO of fraud-hit Swiss bank UBS, must be wondering what he’s got himself into. Just three months into the job, he was blindsided, along with CEO Oswald Gruebel, by alleged fraud and false accounting perpetrated by 31-year-old accused rogue trader Kweku Adoboli, which has resulted in a loss of more than US$2 billion for UBS.

Gruebel, 67, has just resigned. Naratil, 49, will now work with 51-year-old Sergio Ermotti, who has been named interim CEO. “This is a bank now in disarray,” Chris Wheeler, an analyst with Mediobanca Securities in London, told Bloomber. “It’s got a brand new CFO and now they’ve let the CEO walk away.”

In a conference call with journalists, UBS Chairman Kaspar Villiger said that the board of directors had attempted to convince Gruebel to stay on at least until the annual shareholders’ meeting in 2012. The CEO, who had boasted that UBS probably had one of the best risk management units among global banks, had earlier said he would not step down

“I did not take the step of resigning lightly,” Gruebel wrote in a memo to UBS staff about his September 25 decision. “I am convinced that it is in the best interests of UBS to approach the future with a new leader at the top.”

He was “shocked,” Gruebel said, “that it was possible for one of our traders in London to inflict a multibillion loss on our bank through unauthorized trading.”

A respected banker who served also served CEO of UBS rival Credit Suisse, Gruebel was enticed out of retirement in 2009 after the global financial crisis brought UBS to the brink. He made the bank profitable almost immediately and also started to rebuild UBS’s investment bank unit into top-tier investment bank.

That ambitious goal is almost certainly dead now. “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,” Villiger, the board chairman, told reporters.

CFO Naratil, interim CEO Ermotti and Carsten Kengeter, 44, who heads the investment bank unit, have their work cut out.

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