UBS sought to brush its disastrous performance during the financial crisis under the carpet yesterday by admitting mistakes but ruling out any legal action against its former bosses.
The bank said that while there were grounds for it to pursue them through the civil courts, it had decided to take no action, in part because court cases would generate negative public relations and prevent the restoration of its "good name".
UBS said: "Experience has shown that such cases last many years, generate high costs, lead to negative international publicity and thus hamper UBS's efforts to restore its good name in the markets in which it operates."
It added: "A final, and particularly important, reason is that such proceedings would weaken UBS's legal position in pending cases, regardless of whether the former management is ever found to be liable." To support its stance the bank cited a statement of opinion by Peter Forstmoser, a professor of law at the University of Zurich, who said that omissions could be identified "which would be a sufficient basis to initiate legal proceedings against former individual directors or officers".
However, UBS added that "he regards the decision of the board of directors to refrain from legal proceedings not only as appropriate, but also as necessary" in the interests of UBS and shareholders.
Some shareholder groups have been agitating for the bank to seek redress from former senior directors such as Marcus Ospel, who departed as chairman in 2008, along with Peter Wuffli and Marcel Rohner – who served as chief executives until 2007 and 2009 respectively. As it is, they have given up pay totalling Sfr70m (£46m).
The decision was made alongside the publication of a 75-page "transparency report" to shareholders covering failings at the bank during the financial crisis during which it lost or wrote down more than $50bn (£31bn).
The chairman Kaspar Villiger sought to mollify angry shareholders by admitting to mistakes by UBS and saying "what happened should not have been allowed to happen". The bank has since instituted a complete overhaul of its management, including the appointment of former head of Credit Suisse Oswald Grübel as chief executive. Pay policies have also been modified, including paying 60 per cent of bonuses to managers in shares, some of which are deferred. Similar policies have been enforced in the UK.
The report also highlights problems with the UBS wealth management division, which Mr Villiger said had behaved "inappropriately" by allowing US citizens to open Swiss bank accounts with the aim of avoiding tax. Even when US watchdogs started investigating, he admitted UBS had acted "in a manner that was insufficiently rigorous" to improve compliance. The bank was ordered to pay $780m in fines by America's Securities & Exchange Commission as a result of the affair.
UBS's troubles forced the Swiss Government to intervene with a package of aid in 2008 and, while the bank is recovering, shareholders have been warned to expect no dividend for several years while it rebuilds capital.