Swiss bank UBS's Chief Executive Oswald Gruebel resigned, shouldering the blame after its scandal-hit investment banking business lost 2.3 billion dollars in alleged rogue trading.
Changes that will see that part of the bank's operations adopt a less risky business model would be pushed through faster, its chairman said, and Europe, Middle East and Africa head Sergio Ermotti would replace Gruebel on an interim basis.
Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorized trading incident. It is testimony to his uncompromising principles and integrity, Chairman Kaspar Villiger said in a statement.
Gruebel, a 67-year-old former trader who helped turn around Credit Suisse a decade ago, was brought out of retirement in 2009 to try to revamp UBS after it almost collapsed in 2008 under the weight of more than 50 billion dollars lost on toxic assets.
Ermotti, a 51 year-old from Switzerland's Italian-speaking region of Ticino, was already being groomed as a possible successor since he joined UBS in April from UniCredit after he was passed over in a management reshuffle at the Italian bank following the departure of CEO Alessandro Profumo.
The board statement made no mention of the fate of investment bank boss Carsten Kengeter, whose future had also hung in the balance over the trading loss in his division.
The UBS board, which continued a meeting by telephone conference on Saturday that had started in Singapore this week, said it was deeply disappointed by the trading scandal.
It will fully support the independent investigation and will ensure that mitigating measures are implemented to prevent such an incident from recurring, it said.
UBS trader Kweku Adoboli was sorry beyond words for what had happened and was appalled at the scale of the consequences of his disastrous miscalculations, his lawyer Patrick Gibb said at a court hearing in London on Thursday.
The 31-year old did not enter a plea and was remanded in custody until a further hearing next month.
UBS said in August it would axe 3,500 more jobs to shave 2 billion Swiss francs off annual costs, with almost half of those cuts coming from the investment bank, which had grown to almost 18,000 staff from 16,500 a year ago.
Clients pulled nearly 400 billion Swiss francs (442 billion) , almost 20% of total client assets, from UBS after the bank was battered in the financial crisis as well as a prolonged dispute with the US tax authorities and posted the biggest annual corporate loss in Swiss history.
Villiger said Gruebel had achieved an impressive turnaround and strengthened UBS fundamentally. But other private banks are now circling again to nab clients worried about reputation risk in the wake of the rogue trader affair.
UBS largest shareholder, Singapore sovereign wealth fund GIC, met the bank's management earlier in the week and in a rare public statement expressed its disappointment. It urged them to take firm action to restore confidence and wanted details of how the bank would tighten risk controls.
UBS's board meeting, one of four regular ones per year, had originally been due to end on Friday ahead of the UBS-sponsored Singapore Formula One motor racing Grand Prix on Sunday, when executives will be trying to reassure big clients.
In 2007, former UBS CEO Peter Wuffli was ousted unceremoniously at a board meeting in Spain to coincide with the America's Cup yachting event there, in which UBS was sponsoring a team.
The loss allegedly caused by Adoboli in unauthorised trades compares to the 6.6 billion dollars lost by rogue trader Jerome Kerviel at Societe Generale three years ago, an event that prompted calls for tighter rules and felled that bank's then-chairman and CEO Daniel Bouton.