UBS chief falls on his sword over £1.5bn loss run up by rogue trader

The move ends days of speculation about Gruebel’s future at the helm of Switzerland’s biggest bank following the scandal generated by the London-based trader, Kweku Adoboli.

Adoboli was arrested last week and charged with fraud and false accounting that led to the £1.5bn loss. He is being held in custody ahead of a hearing next month.

UBS’s Europe chief, Sergio P Ermotti, will take over immediately as interim chief executive until Gruebel’s replacement is appointed, the bank said in a statement.

UBS’s president, Kaspar Villiger, said the board regretted Gruebel’s decision to stand down, but had decided to accept it. “Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorised trading incident,” Villiger said in the statement. “It is testimony to his uncompromising principles and integrity.”

Villiger said Gruebel, who was brought in more than two years ago to help revive the fortunes of the Zurich-based bank, had achieved “an impressive turnaround and strengthened UBS fundamentally”.

At the time of his appointment, the bank had suffered an unprecedented loss from investments in the sub-prime mortgage market and become embroiled in an embarrassing US tax evasion case.

The 67-year-old German, who came out of retirement to lead UBS, steered the bank back to profit and resolved the US tax evasion case, though not without blowing a hole in Switzerland’s storied tradition of banking secrecy.

As head of UBS he also accepted new Swiss government rules that require the bank and its rival Credit Suisse to hold far greater capital reserves to prevent a possible collapse during a banking crisis.

“He steps down having helped make UBS one of the world’s best capitalized banks,” Villiger added. The announcement also noted that the board, which met in Singapore this week, would seek to put in place measures to prevent a similar rogue trading loss from recurring.

Gruebel declined to answer questions as he left the bank’s board meeting. Analysts had been divided over whether Gruebel would go sooner, or stay on until the bank restructured its scandal-hit investment banking unit, which some said could be split off or even sold.

UBS said it would hold on to its integrated strategy, but that the investment bank’s business would be simplified to ensure there is less risk, using less capital to produce more reliable returns. It didn’t immediately say whether investment bank chief Carsten Kengeter would keep his job.