Skip to main content

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.



) --


(UBS) - Get Free Report

is under pressure from investors and regulators regarding its inadequate risk management and internal control systems, which led to a loss of $2.3 billion from unauthorized trading by a single bank employee.

The banking group's CEO Oswald Grübel resigned from the top job, and Sergio Ermotti will serve in the interim, formerly the CEO for the group's operations in Europe, Middle East and Africa. UBS competes with other global banking giants such as

Credit Suisse

(CS) - Get Free Report


Morgan Stanley

(MS) - Get Free Report



(JPM) - Get Free Report


Deutsche Bank

(DB) - Get Free Report


Goldman Sachs

(GS) - Get Free Report


Grübel, who had also headed rival Credit Suisse from 2003 to 2007, was brought out of retirement as UBS Group CEO in February 2009. He was charged with the task of turning around the Swiss bank's fortunes after huge losses during the global economic recession. Grübel pulled the bank's performance out of the red in just six months. In the words of UBS Chairman Kaspar Villiger, Grübel had "achieved an impressive turnaround and strengthened UBS fundamentally."

In response to the rogue trading scandal, Grübel took responsibility for the bank's losses and decided to quit in an effort to stem the wave of criticism facing the bank's risk controls and policies.

Grübel's departure comes at a time when banks in Europe and the US are facing difficult times amid political and macro uncertainty, which has resulted in substantial market volatility.

Ermotti will now overlook the process of beefing up the bank's internal control systems while ensuring that the investment banking business is more aligned to the group's strategy of increased client focus. But this will be an uphill task, and we expect a further shake up to ensue with more exits. There are reports that the axe may fall on investment-banking Chief Carsten Kengeter, Chief Risk Officer Maureen Miskovic and investment bank Chief Operating Officer Thomas Daula.

See our full analysis of UBS.

Like our charts? Embed them in your own posts using the

Trefis Wordpress Plugin


This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.