Updated with details of past 'unauthorized' trade scandal at UBS starting in 4th paragraph.
CEO Oswald J. Gruebel should stop blaming others for his failure to properly manage his bank.
If the best he can do to explain a
$2 billion blunder
is to make a scapegoat out of some low-level trader, then Gruebel should be in a different line of work.
Seriously, if Gruebel and his executive team have so little control over their operations that one trader can wipe out an entire quarter's worth of profit, then why should they keep their jobs?
Especially since this is the second time in two years that "unauthorized" trading plagued UBS. In November 2009,
UK regulators levied one of the biggest fines ever against UBS
related to illicit trades and the bank issued a statement at the time saying it had taken "full remedial steps." Perhaps that was a bad translation.
Today's statement from UBS is further evidence that Gruebel is either incompetent or fatally stupid. Just look at this:
"UBS has discovered a loss due to unauthorized trading by a trader in its Investment Bank. The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of USD 2 billion. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected."
In the first sentence, the bank acknowledges that it has absolutely no oversight of its investment banking operations.
The second sentence says the bank still has no clue about what really happened and is only guessing at the losses.
The third sentence indicates the executives have no idea what the bank's income statement looks like even though the quarter is nearly done.
The fourth sentence shouldn't need to be said. If the bank can't safeguard client money then it shouldn't be in business.
So at least UBS did one thing right. But that's not good enough.