UBS chief: Missteps must 'never happen again'

[October 17, 2011]  ZURICH (AP) -- The recent missteps by UBS must "never happen again" because they could have put both the Swiss banking giant and Switzerland itself at financial risk, the bank's interim CEO says.

Sergio Ermotti told the weekly SonntagsBlick of Zurich that UBS AG's $2.3 billion rogue trading scandal and huge losses on subprime mortgages during the financial crisis might have endangered the nation along with the bank's core asset management business.

Ermotti replaced Oswald Gruebel, who resigned Sept. 24 after the arrest of a London trader on charges of fraud linked with the trades. The scandal has also undone the bank's efforts to clean up its image after massive subprime mortgage losses that forced the bank to accept a bailout from the Swiss government. UBS has also been involved in recent years in a U.S. tax evasion investigation.

The co-heads of UBS's global equities department resigned Oct. 5 and were replaced by Mike Stewart, who joined UBS from Bank of America Merrill Lynch in July. Kweku Adoboli, the 31-year-old trader arrested in London on Sept. 15, worked in that department.

Ermotti has previously described the trading scandal as a "severe setback" to the bank's efforts to regain clients' trust. Despite the heavy loss, however, UBS still expects to make a modest profit in the third quarter. It is due to announce those figures Oct. 25.

Ermotti is quoted by the paper as saying his appointment came suddenly after an initial plan for Gruebel to stay on a few more months was dropped.

He said his five top priorities are to oversee the daily business, finish the probe into the London trading scandal, analyze the bank's efficiency, finish a strategic plan by mid-November and improve overall communications.

"We must quickly learn what can be improved," he said.

[Associated Press]

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