UBS board considers investment bank's fate

The board of UBS extended on Friday its meeting amid the glamour of Singapore's Grand Prix event to decide the future of its scandal-hit investment bank and CEO Oswald Gruebel, on whose watch it lost $2.3 billion in alleged rogue trading. Top executives at the Swiss bank, which has staggered from crisis to crisis over the past three years, are under pressure to downsize or fence off risky trading activities and protect its core business of managing private investors' wealth.
"The meeting is not yet over. The board has only ended its meeting for the day," a UBS spokesman said. UBS's board meeting, one of four regular meetings 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.
"It's a sign that there's still big decisions on the agenda that haven't been made yet," said Sarasin analyst Rainer Skierka of the decision to extend the meeting. UBS shares, which had touched their lowest level since March 2009 earlier in the session as stocks tumbled world-wide, were trading up 2.2 percent at 9.87 francs at 1412 GMT as markets turned positive on talk of European Central Bank action.
After the meeting a casually-dressed Gruebel - a big motor racing fan himself - declined to comment on his future. Wearing a black polo shirt and khaki trousers as he crossed the lobby of Singapore's Ritz-Carlton hotel - where the bank's top brass are staying - Gruebel shook his head when asked by a reporter whether he could say anything.
Clients pulled nearly 400 billion Swiss francs ($442 billion) - almost 20 percent of total client assets - from UBS during the financial crisis as the bank was battered by subprime losses, a prolonged dispute with the US tax authorities and the biggest annual corporate loss in Swiss history. Under Gruebel's leadership, the bank's inflows have since turned positive but other private banks are now circling again to nab clients worried about reputational risk in the wake of the rogue trader affair.
The $2.3 billion loss allegedly caused by UBS trader Kweku Adoboli in unauthorised trades compares to the 4.9 billion euros ($6.6 billion) lost by rogue trader Jerome Kerviel at Societe Generale just three years ago, an event which prompted calls for tighter rules and felled that bank's then-chairman and CEO Daniel Bouton.
With his job now on the line, Gruebel, a former trader himself, was expected to urge the board to keep him and his 'integrated banking' strategy - maintaining the investment bank which he placed at the heart of UBS' recovery when he took over in 2009. A UBS source said the board meeting - held in UBS offices at the exclusive Raffles Quay location - would be given an update on its internal investigation into the trading debacle - potentially helping it decide where the buck should stop.