GENEVA (AP) - UBS chief executive Oswald Gruebel has resigned over a $2.3 billion rogue trading loss, the bank said Saturday. It said Gruebel's decision was an attempt to allow UBS to start afresh following the latest major scandal to hit Switzerland's biggest bank.
UBS Europe chief Sergio P. Ermotti will take over immediately as interim chief executive until Gruebel's replacement is appointed, the bank said.
UBS's president Kaspar Villiger said in a conference call with reporters that the board regretted Gruebel's decision to resign but had decided to accept it.
"Oswald Gruebel feels that it is his duty to assume responsibility for the recent unauthorized trading incident," he said. "It is testimony to his uncompromising principles and integrity."
London-based UBS trader Kweku Adoboli was arrested last week and charged with fraud and false accounting for the $2.3 billion loss. A judge ordered him Thursday to be held in jail until a hearing next month.
Villiger said the board had tried to convince Gruebel to stay until the bank's annual shareholder meeting next year, but the gruff-voiced German had wanted to send a strong signal about the trading loss immediately.
"He thinks that this act could maybe create a new basis for UBS to continue," said Villiger, who earlier noted that UBS wants to "turn this disaster into an opportunity."
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 Gruebel's appointment, the bank had suffered an unprecedented loss from investments in the subprime mortgage market and become embroiled in an embarrassing U.S. 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 U.S. 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 left the bank's board meeting first Friday, refusing to answer reporters' questions as he sat alone in the back of a chauffeured Mercedes.
Analysts had been divided over whether Gruebel would go quickly, 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 Saturday that 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. Asked whether investment bank chief Carsten Kengeter would keep his job, Villiger said: "I do not see any reasons to doubt the future of Carsten Kengeter."
Earlier this week, the Government of Singapore Investment Corp. - the largest UBS shareholder - said in a rare public rebuke that it was concerned about lapses at UBS and called on the bank to restore confidence.
The sovereign wealth fund, which owns about 6.4 percent of UBS, has suffered heavy losses on its investment as the bank's share price has more than halved since it became a shareholder.