UBS head not quitting

GENEVA (AP):

Oswald Gruebel, the chief executive of UBS, has dismissed calls for his resignation even as the Swiss banking giant raised its estimated loss by a rogue trader to US$2.3 billion.

UBS had previously put the loss at US$2 billion when news of the scandal first broke last Thursday.

In a bid to reassure investors, the Zurich-based bank said yesterday it has "now covered the risk resulting from the unauthorised trading" and its equities business "is again operating normally within its previously defined risk limit".

UBS also confirmed for the first time that the trader, 31-year-old Kweku Adoboli, was already under investigation by the bank when he revealed his actions to authorities last Wednesday.

"The loss resulted from unauthorised speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months," UBS said, adding that the magnitude of the bank's risk exposure was hidden by fake trades.

Adoboli remains in custody in London, charged last Friday with acts of fraud and false accounting dating back to 2008. His next court appearance is Thursday.

The fact that the fraud took place over three years raises serious questions about the bank's ability to manage its risk. UBS said it has set up a special committee chaired by David Sidwell, the bank's senior independent director, to investigate the incident.

Speaking for the first time since UBS revealed the loss, Gruebel told the Swiss weekly Der Sonntag that the loss couldn't have been prevented.

"If someone acts with criminal energy, then you can't do anything. That will always be the case in our business," the former trader said in the interview published yesterday.

But some Swiss politicians and commentators have called for Gruebel's head to roll over the loss, which is likely to put UBS's third-quarter results deep in the red.

Such a move would signal defeat for the gravel-voiced German, who was brought in more than two years ago to revive the bank's fortunes after a series of missteps that included vast losses in the US subprime mortgage market and an embarrassing US tax evasion case.

Gruebel told Der Sonntag that he has no intentions of resigning.

"I'm responsible for everything that happens at the bank," Gruebel told the paper. "But if you ask me whether I feel guilty, then I would say no."