Read news from:
Austria
SHARE
COPY LINK

UBS

UBS says CEO Oswald Grübel resigns

Swiss banking giant UBS announced on Saturday that chief executive Oswald Gruübel has handed in his resignation, which was accepted by the board of directors.

Published: 24 September 2011 13:54 CEST
UBS says CEO Oswald Grübel resigns

Sergio Ermotti has been named as interim CEO effective immediately, a bank statement said, nine days after the arrest of a trader accused of a $2.3 billion fraud at UBS.

While the board “regrets” Grübel’s decision UBS Chairman Kaspar Villiger said in the statement Grübel “feels that it is his duty to assume responsibility for the recent unauthorised trading incident.”

Villiger praised Grübel for “his uncompromising principles and integrity”, and acknowledged that during his tenure “he achieved an impressive turnaround and strengthened UBS fundamentally.”

The board also said it would “fully support” the independent investigation into the rogue trading and would ensure that “mitigating measures” were implemented to prevent such incidents from recurring.

Swiss media speculation had been mounting that Grübel would be ousted at the long-scheduled UBS board meeting held in Singapore in the run-up to Sunday’s Grand Prix — the bank is a major sponsor of Formula One racing.

Reports on Friday said Grübel was expected to seek a vote of confidence during the meeting, with the bank under pressure from shareholders and some Swiss politicians over the rogue-trading scandal.

On Tuesday, the Government of Singapore Investment Corp (GIC), UBS’ biggest shareholder, issued a rare public rebuke to the bank for lapses that led to the losses.

“GIC expressed disappointment and concern at the lapses and urged UBS to take firm action to restore confidence in the bank,” the cash-rich sovereign wealth fund said in a statement.

UBS had turned to Grübel, a former Credit Suisse boss, to stem its record losses amid the global financial crisis and seek a way out of its bitter tax evasion spat with the United States.

Grübel, 67, had engineered Credit Suisse’s own recovery in the early 2000s, after the bank took massive charges arising from the Enron scandal.

Within a year, the bank returned to profitability.

Likewise at UBS, Grübel managed to restore the bank’s profitability around 18 months after he took over the helm.

However, Grübel has now been forced to resign after UBS was hit with an internal crisis on his watch — the discovery of unauthorised trades allegedly made by trader Kweku Adoboli which lost the bank $2.3 billion.

Born November 13th, 1943 in eastern Germany, Grübel had entered the banking industry as an apprentice at Deutsche Bank.

His interim successor Ermotti had been appointed chairman and CEO of UBS Group Europe, Middle East and Africa in April, according to the UBS Investment Bank website.

FRANCE

Switzerland’s UBS faces €3.7-billion fine as crucial court ruling looms

A Paris court will rule Wednesday on whether Swiss banking giant UBS illegally tried to convince French clients to hide billions of euros in Switzerland, charges which prompted prosecutors to seek a record €3.7-billion fine.

Published: 19 February 2019 09:10 CET
Switzerland's UBS faces €3.7-billion fine as crucial court ruling looms
UBS denies charges it helped French clients evade tax and says it will defend itself "vigorously". Photo: AFP

The trial opened last autumn after seven years of investigations, launched when several former employees came forward with claims of unlawful conduct. 

The move came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the global financial crisis which erupted in 2007.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information among each other.

In the UBS case, French authorities determined that more than €10 billion had been kept from the eyes of tax officials between 2004 and 2012.

The National Financial Prosecutor's office urged a €3.7-billion ($4.2 billion) fine, the largest ever sought in France, saying the bank and its directors “were perfectly aware that they were breaking French law” by unlawfully soliciting clients and helping them evade French taxes.

They also sought a €15 million fine for UBS's French subsidiary, and fines of up to €500,000 for six top executives, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.

In addition, lawyers for the French state, which is a plaintiff in the case, asked for €1.6 billion in damages.

UBS, which was ordered to post €1.1 billion in bail, has denied the charges and said its operations complied with Swiss law.

It also says that it was “unaware” that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case is being closely watched by industry executives at a time when Paris and other European capitals are hoping to lure multinational banks from London as Brexit looms.

'Milk tickets'

UBS is accused of organising or inviting prospective clients to prestigious outings such as the French Open or luxury hunting retreats, where UBS's Swiss bankers would meet their “prospects” — something they were not allowed to do under French law.

UBS France directors then used notes called “milk tickets” to keep track of how many “milk cans” – amounts of money – were transferred to Swiss accounts.

They say the system was merely a way to balance out bonuses due to French bankers who were effectively losing a client to their Swiss peers, and the notes were later destroyed.

But investigators claim the “milk tickets” were proof that UBS had a parallel accounting system for keeping the transfers off its official books.

Only one “milk ticket” was found during the inquiry, prompting defence lawyers to argue there was no proof to justify claims of a massive fraud.

Yet prosecutors pointed to the roughly 3,700 French UBS clients who later took advantage of an amnesty offer to regularise their tax declarations with the French authorities.

UBS has been embroiled in a series of similar cases, most notably in the United States, where the authorities said the bank used Switzerland's banking secrecy laws to help rich clients avoid taxes.

In 2009 it paid $780 million to settle charges it helped thousands of American citizens hide money from the Internal Revenue Service, and agreed to turn over information on hundreds of clients, severely denting Switzerland's long tradition of shielding banking clients and their operations from prying eyes.

That case was also prompted by a former American UBS employee turned whistleblower, Bradley Birkenfeld, whose book “Lucifer's Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy” was published in 2016.

Last November UBS was again sued by US authorities, who accuse the bank of misleading investors over the sale of mortgage-backed securities in 2006 and 2007, just before the financial crisis struck.

UBS has denied the charges and said it will defend itself “vigorously”.