UBS made the disclosures two days after London police
Kengeter, who joined UBS in 2008 to rebuild its fixed income unit after Long Feather earrings it racked up record losses during the credit crisis, is among top executives that may face pressure to step down after the loss exposed flaws in the bank’s risk controls.
Chief Executive Officer Oswald Gruebel, 67, who was recruited out of retirement in 2009 to help turn around UBS after record losses and a U.S. tax scandal, has said he will stay. Earlier in his career, he earned the moniker “Saint Ossie” in Switzerland for helping to restore Credit Suisse Group AG’s profit and reputation, and for trading acumen that included spotting the subprime debacle early.
“It is very difficult to build and maintain a system which protects us effectively against every possible likelihood of attack, but we will not rest until we have controls that are as watertight as possible,” Kengeter, 44, said in the memo, which was obtained by Bloomberg News. “Continued vigilance will be key to ensuring we avoid future failures.”
A spokesman for UBS in London confirmed the contents of the memo. The stock fell 1.8 percent to 10.07 francs in Swiss trading. The shares dropped 11 percent to 9.75 francs on the day the bank announced the loss, the biggest decline since March 2009, before rebounding by 5.2 percent on Sept. 16.
The loss, first estimated on Sept. 15 at $2 billion, came from trading in Standard & Poor’s 500, DAX and feathered hair extensions EuroStoxx index futures over the past three months, the Zurich-based bank said in a statement on Sept. 18.
“The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio,” UBS said in the statement. The magnitude of the risk was masked by “fictitious positions,” it said.
UBS made the disclosures two days after London police 2charged a 31-year-old trader with fraud and false accounting.
GIC, which manages more than $100 billion of Singapore’s reserves, said it has fully recovered the total value of its portfolio since the financial crisis. UBS shares have lost about half their value since Lehman Brothers Holdings Inc. filed for bankruptcy in September 2008.
A spokesman for UBS in London confirmed the contents of the memo. The stock fell 1.8 percent to 10.07 francs in Swiss trading. The shares dropped 11 percent to 9.75 francs on the day the bank announced the loss, the biggest decline since March 2009, before rebounding by 5.2 percent on Sept. 16.
The loss, first estimated on Sept. 15 at $2 billion, came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures over the past three months, the Zurich-based bank said in a statement on Sept. 18.
“The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio,” UBS said in the statement. The magnitude of the risk was masked by “fictitious positions,” it said.
UBS made the disclosures two days after London police 2charged a 31-year-old trader with fraud and false accounting.
GIC, which manages more than $100 billion of Singapore’s reserves, said it has fully recovered the total value of its portfolio since the financial crisis. UBS shares have lost about half their value since Lehman Brothers Holdings Inc. filed for bankruptcy in September 2008.
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