UBS chief executive faces board over alleged rogue trader

UBS chief Oswald Grübel understood to be seeking vote of confidence after trader Kweku Adoboli charged with fraud Oswald Grübel, head of the Swiss bank at the centre of a £1.45bn alleged rogue trading scandal, will ask directors to back him or sack him at a UBS board meeting in Singapore on Wednesday and Thursday. The 67-year-old German, who was brought in as chief executive by UBS in 2009, is understood to be seeking a vote of confidence following losses which came to light in the City last week. Directors will also look at the future of Carsten Kengeter, head of UBS’s investment banking operations, which lie at the heart of the scandal that has rocked the Swiss establishment. English boarding school-educated Kweku Adoboli, a 31-year-old derivatives trader, was charged with fraud and false accounting when he appeared before London magistrates on Friday. He faces allegations of misdemeanours that go back as far as 2008, and was remanded in custody. Adoboli worked in the bank’s so-called delta-one trading section which invests in exchange traded funds, allowing speculators to bet on price rises in a range of commodities and stock market indices. The UBS board meeting, arranged prior to disclosure of the trading scandal, is being held in Singapore, home of the bank’s biggest shareholder, GIC, a sovereign wealth fund that acquired a 6.4% stake three years ago. In a rare public statement, GIC expressed regret at the failure of the bank’s risk management controls to detect the losses, and urged UBS “to take firm action to restore confidence in the bank”. UBS’s top brass will also decide over the whether to accelerate plans that could lead to a contraction of UBS’s investment bank, which employs several thousand staff in London. The fixed income desk, which is smaller than most of the bank’s international rivals’, is viewed as particularly vulnerable, but other activities, such as equities trading, could also be reined in following the scandal. Another option is for the bank to outlaw proprietary trading, where an institution makes financial bets by using its own money. The bank is anxious to protect the reputation of its core business: the wealth management division that looks after the financial interests of the global rich. Grübel was quoted by Swiss newspapers as saying he would “bear the consequences” of the scandal, although he didn’t want to quit. During the financial crisis, it emerged UBS had lost billions by investing in sub-prime mortgages. At the same time it was the target of a lengthy US investigation into claims it helped American clients avoid taxes. Grübel, who had restored the fortunes of Credit Suisse, was recruited to do the same at UBS, founded in 1854. City sources said the magnitude of the rogue trading scandal had been concealed by elaborate hedging of the bank’s exposure that led to delays in winding down huge positions in equity futures. UBS has set up an independent committee under David Sidwell, the bank’s senior non-executive director, to conduct a review of the affair, but critics say Sidwell cannot be viewed as independent. UBS Kweku Adoboli Banking European banks Switzerland Richard Wachman guardian.co.uk

Posted by on September 20, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.