UBS forced to reassure staff after rogue trader affair


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UBS bosses have urged employees to "move forward forcefully and decisively" as it seeks to repair its damaged reputation after falling victim to potentially the biggest rogue trading scandal to hit the City of London.

Carsten Kengeter, the embattled chief executive of the bank's investment arm, sent a memo to staff, reassuring them that the bank would not bow to calls to shrink the division after revealing last week that it had lost £1.3bn in unauthorised trading.

He said: "Over the weekend our partners in other divisions have confirmed that they cannot achieve their ambitious goals without a healthy and vibrant investment bank alongside, co-operating at every level." He said the division's fundamental strategy remained in place, adding clients "are inundating us with messages of support".

UBS revealed over the weekend it would conduct an independent investigation of the unauthorised trading. The investigation, which starts today, be chaired by David Sidwell, the former chief financial officer of Morgan Stanley who joined the board of UBS in 2008.

"We will deal appropriately with those individuals who were responsible for significant operational and management supervision lapses, and then we must move on," Mr Kengeter said.

Oswald Grübel, the chief executive of UBS, said in an internal memo sent yesterday: "We want to reassure you that we, together with the rest of the management, are working closely with the investment bank's management and risk and controlling to get to the bottom of the matter as quickly as possible." He also argued that "if someone acts with criminal energy, then you can't do anything" about rogue trading.

The statement was met with anger by some in the financial community, who called for the head of the beleaguered boss. The Australian money manager John Hempton said: "Your statement that 'you can't do anything' is a statement that you are abdicating your duty. I hope that statement is misquoted because if I were on your board and you took that stance I would be seeking your resignation."

On Sunday, UBS released more information about the trades and revealed the losses were £191m more than initially estimated. It blamed unauthorised bets which had not been properly hedged, adding that the size of the risk was distorted with fictitious positions. Kweku Adoboli, a 31-year-old trader, was charged with fraud in connection with the case.

Mr Kengeter said: "We all share a sense of anger and frustration. This is understandable, but I am determined not to let this incident undermine our hard-won achievements since the crisis." He added: "We now need to unite in our determination to move forward forcefully and decisively."