UBS CEO not resigning in trading scandal

GENEVA — Oswald Gruebel, the chief executive of Swiss banking giant UBS, says he feels responsible — but not guilty — for the $2 billion loss allegedly incurred by a rogue trader that plunged the bank back into scandal just as it was rebuilding its tattered reputation.

Speaking for the first time since UBS revealed the loss Thursday, Gruebel also told the Swiss weekly Der Sonntag that he isn’t thinking about resigning because of the latest financial fiasco to befall the Zurich-based bank.

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 signal a 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 U.S. subprime mortgage market and an embarrassing U.S. tax evasion case.

“I’m responsible for everything that happens at the bank,” Gruebel said in the interview published Sunday. “But if you ask me whether I feel guilty, then I would say no.”

UBS is expected to reveal further details about the fraud — allegedly committed by a single London trader over three years — before the markets open Monday. The trader, 31-year-old Kweku Adoboli remains in custody, having been charged Friday with acts of fraud and false accounting dating back to 2008.

Gruebel pledged to stamp out risky business practices at UBS when he came out of retirement in early 2009 to take the helm of Switzerland’s biggest bank. UBS had just suffered its biggest losses ever due to missteps by the very investment unit that is now making headlines again, and had to take a $60 billion bailout from the Swiss government to stay afloat.

Swiss media on Sunday cited unnamed UBS board members saying the 67-year-old Gruebel retains the confidence of major shareholders, including the Government of Singapore Investment Corp. The sovereign wealth fund holds more than 6.4 percent of UBS’s stock, whose value dropped almost 10 percent following the announcement about the fraud.

Gruebel is expected to survive until at least Nov. 17, when he is due to present investors with an update on the bank’s activities. Banking experts in Switzerland have suggested the investors day may be used to announce a downsizing or even a spin-off of the investment unit.

In a previous case of rogue trading causing massive losses, the chairman of French bank Societe Generale Daniel Bouton stepped down more than a year after the bank revealed that a single trader lost (euro) 4.9 billion ($6.7 billion). Bouton said repeated attacks on him were a threat to the bank’s health.

So far, it is unclear who could even replace Gruebel.

The only name that has been mentioned is that of Sergio P. Ermotti, chief executive of the bank’s Europe, Middle East and Africa business. Promoting Ermotti would satisfy those who want to see a Swiss at the head of the country’s most important financial institution, to counterbalance incoming chairman Axel Weber, another German and a former president of Deutsche Bank.