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UBS' CEO Booted
Things for UBS are just getting from bad to worse. The UBS "Rogue Trader" incident which was anything but rogue and certainly involved far more than just a trader, has struck at the very top and just claimed the scalp of the top man at the organization, forcing many to ask: just what is really going on behind the scenes at the embattled Swiss bank? Alas, this latest development means that life for the bank's other employees is about to become a (bonus free) living hell, as a complete overhaul of the employee base is imminent. From Reuters: "The board of UBS accepted on Saturday the resignation of Chief Executive Oswald Gruebel after the Swiss bank lost $2.3 billion in alleged rogue trading and said it had appointed Sergio Ermotti to replace him for now. Ermotti, a 51 year-old from Switzerland's Italian-speaking region of Ticino, joined UBS in April from UniCredit as head of Europe, Middle East and Africa. Before joining UniCredit in 2005, he worked at Merrill Lynch for 18 years. The board said in a statement it had asked management to accelerate an overhaul of the investment bank already under way "concentrating on advisory, capital markets, and client flow and solutions businesses". 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. But deliberations continued on Saturday by conference call after the board left Singapore on Friday with some members headed back to Switzerland, sources told Reuters. "
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Booted w/ golden handshake?
Rumor, this guy was involved:
http://uk.linkedin.com/in/philippenton
He left in JULY! as the Global head of Equity Delta One at UBS! QED.
Come on, if anything, I bet Grubel is clueless to how to even touch type.
The entire second and third tier "management" are involved... You don't hear about them, because Grubel took one for the team!
Adoboli is probably 5-6 levels removed from Grubel, you do the math...
I'm shocked, shocked I tell you that more than one rogue trader was involved. This is probablt good for the bank. How would anybody and especially the Swiss trust a bank with so little oversite that one low level trader could do such damage. Getting burned badly in this time of high sigma events is more understandable.
Ain't it ironic that this company should have so much financial problems, when they employ ex senator Phil Gramm as a vice president - you know the Phil Gramm who helped repeal Glass-Stegall to help the banks make more money.
Phil's wife also works for UBS, small world isn't.
I'm sure Phil and Wendy Gramm were sitting there at the derivatives trading desks with the rest of the 30 year olds
Way to go!
No proprietary trading.
?
What the fuck do you think capital markets is.
Unless Postal Office runs banks... ZeroPower is right, client faciliation and proprietary trading are the same. It is all market making and providing liquidity... At the end of the day, making money with money. Understand? So, prop trading, doo-frank, volker be damned, none of it matters...
By quoting wikipedia, it shows that you never worked in Finance.... so don't worry about it.
It's either that or Vegas... The entire WORLD is run on ponzi!
Well, by quoting wiki I saved time that´s all.
I´ve worked in Finance for 8 years (for a cta fund) and got out last year...
There is truth, and there are "definitions". You decide.
I guess you didn't trade or had a p/l... not that it is a bad thing, but then you realize what does it all mean... ;-)
So, in essence, you´re saying that one can´t distinguish between market making and prop trading? I think there is a huge difference.
Not for the regulators...
It is like porn and art... the practitioners know, the spectators know, and the government (from taxes) know. You trust SEC/Finra/Fed to successful prosecute, even with Volker, doo-Frank and other still-to-be-written regulations?
I put my money on the banks... (all pun intended.)
Ok. Now i see where you´re coming from.
I think there is a solution for that problem. The best regulation of them all is allowing them to fail. We need get rid of the implied bailout guarantees. Even if this means to have a total collapse of the system. It can´t be fixed anyway
I see that you care trying to understand the issues. Good luck with that.
But here is the problem:
Hank Paulson, under the previous administration (which to be honest, both parties and our entire US govt , or the world govts for that matters is entirely manipulated by Wall Street. Which is just synonymous with power, money, glamour and success), as the Treasury Secretary, before he wrote those 3 pages along with Neal Kashkari (now at Pimco, pitching Equity funds.) and ask for $750 Billion, had a serious, real and hard choice to make. Whether to let it all fail, and risk Armageddon, or salvage what he could.
Forget "on the brink". (Hank's own book.) , we are now BEYOND the point of no return... We are worse than the Japanese after their 1989 crash... (After all they INVENTED the concept of quantitative easing... not all wiki links are bad... ;-) )
http://en.wikipedia.org/wiki/Quantitative_easing
The rest and uncertain consequences are being sorted out. To argue for letting them fail is fruitless, and if Hank can't make the right choice then, (after initial TARP vote failure, after bailing out AIG despite letting Lehman fail.), to undo the bailouts are virtually impossible. (We didn't even re-instate Glass Stegall, after all this fiasco, and Volker rule is not yet finished. You tell me who is running this country.) Let's face it, JPM, GS, MS, CS, Citi, BAC, WFC are all the same... 13 out of 14 NEEDS that bank bailout, 1 supposedly doesn't. AND THAT IS WHAT BEN SAID! I say that the bailout were institute by the banks, with the deniability uncertainty built in. (oh no, they made us take it... ;-)
AIG changed Hank's mind, and we can all speculate why... But remember Moral Hazard as a general concept?
Good luck to us all... this mess will have to sorted out in decades, and this is all just damage control...
Do i understand you right, you think the bailouts were the right decision and we should deal with a zombie bank system for several decades?
Oh no, you didn't... (snap my fingers in zig zag gesture.) You have unleashed a monster, but thanks for asking...
I think the bailouts are absolutely wrong, the banks should have died, the postal office should take our deposit money, and give it back to us with interest set by a true National entity... the loans should be given out by some capital market company, the entire NYSE should be in an auction system, akin to Ebay. (instead of pretending that the trading floor matters, with CNBC and Bloomberg talking to "traders" who look busy punching in numbers....) Who decides that fraudulent company like Groupon get to to Ipo versus some clean tech or bio-tech start ups? (BANKS! I mean "underwriters"). This whole capital allocation system in Sillcon Valley mystifies me... did you know KPCB / Ray Lane / Tom Perkins and Meg Whitman are all friends?
And I think what I think doesn't matter. The path has been set. By elected officials on BOTH parties. We can all pontificate all we want about what would have, should have and could have.. and I do an amazing job at that... (pat on myself on the back.)It is clear! Americans need a system to believe in, and our systems and path is as good as any.
I don't really know what it all means... and I know there is a lot of things that I don't know but I know more than most.
Update: While we are at it, I would also want a national college football league. world peace and cure cancer... ;-)
Hank Paulson, under the previous administration (which to be honest, both parties and our entire US govt , or the world govts for that matters is entirely manipulated by Wall Street.
Blaming Wall Street, some argue, is part of the plan.
"For more than a century ideological extremists at either end of the political spectrum.... have attacked the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that's the charge, I stand guilty, and I am proud of it."
http://www.thedailybell.com/2031/David-Rockefeller-Sr
If you are going there, might as well stop by the Rothschilds station... Google both, and see what you get...
Everything I said, I stand by as my own ideas/thought/suggestions... I am sure there are lots of culprits (and potential headfakes)... but I like to accuse what I know...
I'm not trying to argue with you. I was just trying to open a new door for you to explore. Judging by your response you have it all figured out. Good for you and good luck.
No, I DON'T have everything figured out. (hence my avatar is not butt, tits, thongs... but a BIG QUESTION MARK!) Not even all that clever...
But I really hate how people are so closed to ideas, that even if I don't endorse yours, I must be against you. (Kinda like a counter open-mindedness.)
I have heard about the Rockfellers and Rothchilds for YEARS, and I am sure some of it is true and the rest is probably true. All I am saying is that everything I proclaim in this blog, I KNOW! From first hand experience. If you want to get on the crazy train, and I don't see why one won't, (Gvien the way the word has been, DSK WikiLeaks, Putin..) there are other stations that we can stop off:
Just to kick open a few other doors, Rockfeller, Rothchild, FreeMason, Buffett (don't tell me Oracle is that altruistic.), Gold Bugs, Silver Sluts (No, corrupt govenment and society DOES NOT mean you have to buy PMs, you should and might, but there ARE RISK, like EVERYTHING else!), ZH itself (who exactly runs this site?) Who is paying for the new servers, programmers and upgraded look-and-feel.
Judging from the numbers, it seems 95%+ of visitors don't even comment, and they might be the smartest of us all!
Bottom-line, as long as we are enamored with fast cars, beautiful women and beach homes (and I certainly AM!) we are beholden to Money. And is Wall Street / Rockfeller / Rothchild all that different? really? At the end, the story of humans is thousands of years, and it is still being written.
Relax. Enjoy your way of thinking... Nothing is absolute. Still want my college football championship though.... and it looks like it is going to hapen...
Your first paragraph is one of the funniest and purest things I have seen in two years and nine months of reading Zerohedge.
You self-deprecate with style.
@chindit13: I totally agree. There's certainly something intriguing lirking 'inbetween the lines' of his writting that leads me to believe that Mr.'whats it all mean' is a little smarter than he would have us belive he is.
Nicely written, surprisingly amusing... but above all... Very Entertaining.
yep! prop trading is still well and alive
you forgot to add "with the government as your counter-party." other than that i give you...an a+ sir! Thank God there's not a war going on!
Only 2.5 wars. (I count Libya as half..) And those are the public ones...
"with the government as your counter-party."
Technically that is incorrect. There are two counterparties. The first choice is some medium sized bank in Bavaria. If that is the counterparty, that constitutes a winning trade, and the trader can feel quite proud of himself for proving PT Barnum right.
The second choice is the government, which is to say the taxpayer. Rather than be a "win", this is sort of like a golfer's Mulligan, except with the reset you also get your green fees back, and the person at the cash register errs in your favor by giving you too much money. In this instance the trader can still feel proud of himself, but here it is because he can look himself in the mirror and say, "I'm a friggin Master of the Universe."
LOL! London's affirmative action trading desk. Maybe they should have let the janitor run the trading desk.
Big deal. Just rearranging the deck chairs.
I am sure GS will hire him and make him the APAC President to loot from Asia..Need new hosts and Asians are not stupid to fall for this scam.
What does one say about a bank that chooses a Formula One event as the venue for reassuring it's clients?
Singapore´s sovereign wealth fund is the biggest shareholder, that´s the reason...
so the Singapore sovereign wealth fund made them go to the grand prix?
Iron man 2?
Nasty rodent teeth. Don't these people believe in dentistry?
Blood stained teeth.
This idiot is a vampire.
And greased hair. What a fucktard.
Their dentists all come here so they can earn $2,000 (cash) for a crown v. amere 120 euros in the EU welfare system.
Satanic smile. I bet this guy is pure evil.
That's not a smile...he's actually shitting his pants (as usual, truth in advertising from WB7).
Racing fast cars and chasing hotties in the club house is not the ideal meme for prudent banking.
Banking has seemed anything but prudent of late..... so it kind of fits. Go faster and get laid, sounds like a Banking Mantra to me. It's what I saw amongst Banking buddies in NY NY. Of and of course...snort snort...
ORI
Uppers and Downers
Meh, a change in the Oligarchs caddy is all this is.
Meh, it's F1: highly predictable outcomes, very safe, not much overtaking, honestly a bit boring ... maybe not so bad at all? There's even an international body that keeps fiddling with the rules.
Good points all Drapier. I stopped watching (really watching) once Senna died.
None of the present drivers have that edge. Paddle shift if you will.
ORI
Senna's death was anything but accidental.
Very true Ahmeexnal, which made it all the more tragic.
ORI
Paying other people to race fast cars and paying hotties to pretend to be chased (but never chaste)...what else but vicarious pleasure is left for vampires and reptiles?
The Government allocates the funds for GIC to manage. We are not told the source of those funds, and do not own the funds we manage. We manage the funds on behalf of our client - the Government of Singapore.
I suppose its a good choice his first hand experience at Merril and Unicredit should serve him well at UBS.
These people are worse than royalty that marry their cousins and get hemophilia.
Tyler, that´s bs. This is great news for the company and Swiss tax payers.
Grübels strategy was aggressive expansion in fixed income and better risk managment for the investment bank. He failed dramatically. His resignation is a logical consequence of that. The meeting took place in Singapore because this countrys sovereign wealth fund is the biggest shareholder of UBS. There has been an intense discussion about the future of UBS both inside the company and in the swiss public. Especially the wealth managment people are very angry at the investment bank that constantly undermines their efforts (and bonuses). Swiss media (NZZ; Handelszeitung, Bilanz etc.) speculated for months now that investment banking might be reduced dramatically to have a supportive role for wealth managment and corporate clients. The path to this solution is now clear. Maybe they´ll even split the bank into three branches: 1.) wealth managment; 2.) real estate (UBS has $100 billion + real estate holdings in Switzerland) 3.) investment bank
To the point! Excellent!
look at that a poster with vienna in his ID responding to a girl with Austrian in hers, what are the odds?
The term "austrian" in my username does not refer to a country... "swiss" does.
really? is she hot?
Would Gruebel have been fired if the "rogue trader" had made $2 billion in spite of Gruebel's failing at "better risk management"?
No.
Falsification is the only way to find out whether a risk managment system works or not. We now see the evidence that it didn´t. This scandal is just the trigger. Grübels exit has been long in the making before that.
Their hiring practices on the trading desks in London worked out real well.
"The Rogue trader"
What about Carsten Kengeter? In my opinion he must also go together with St. Oesi!
but, but, but he worked at goldman, it can't be his fault
And as a UBS shareholder I would ask the company to roll back all salary increases in investment banking of last & this year ;-)
Good thing the board could give a flying fuck what the shareholders think (unless you're Singapore and help them with their laundry...not chinese, but still ancient secret).
Statement from Villiger:
"Villiger stellte sich an der Telefonkonferenz hinter Karsten Kengeter, den Chef der Investmentbank der UBS. Kengeter und sein Team hätten hervorragende Arbeit geleistet bei der Bewältigung der Krise. Villiger wies dabei darauf hin, wie schnell die Verlustpositionen des betrügerisch tätigen Händlers geschlossen worden seien."
This is ridiculous.
I laughed and vomited at the same time. Again.
Warum ist eine Afrikaner schwarz man im der trading desk spielen?
i guy who lasted 5 years at unicredit...this should be good
Rogue trader explanation: utter bullshit.
I've litigated against banks, seen them from the inside. You know what a bank is? A paper manual with a balance sheet. That is IT -- a series of instructions and limits in a book, and a ledger where they make journal entries.
To conduct business at or within a bank, you follow the manual. New client? Follow the new client retention and conflict procedures. New loan? Follow the manual, sending it along to the credit and market risk committees if the loan meets a certain threshold. At every step of the way, the bank manual has limits and procedures.
Now, most importantly, the bank manual has reporting instructions. If you do "X," you need to report it to "A," "B," and "C." And banks put in place hardware and software systems which will send out daily reports of positions, credit lines, exposures, etc. I've seen them. Type in a few keystrokes, and you can instantly see the banks' exposure across asset class, division, client, etc. Hell, this is what bankers get paid to do: monitor and manage risks. If any banker ever tells you they didn't know what was going on, that answer is pure, unadulterated bullshit, because banks have robust, vigorous electronic reporting systems.
And this, folks, is the lifeblood of the bank: client needs vs. current exposures vs. availability of the balance sheet. Trust me when I tell you internally, bankers will fight to use the available lines and balance sheet, because whoever is able to put the bank's balance sheet to work, is getting bonused at the end of the year (and that is all these fuckers care about, bonus).
I say all this because of the following. There is no fucking way, none, that UBS took a position with $2.3 billion in exposure and at least some senior execs at the bank didn't know about it. Transactions that start with a "B," as in billion, UBS knows about.
Now, what the CEO knew, I don't know, but his resignation is strong indicia he knew something was up long before the trade turned against them. But people manning the desks? You can bet your life savings a cadre of UBS executives knew. Think Joseph Cassano at AIG -- the derivatives unit at AIG knew it was toast before it blew up. Same thing at UBS: it simply is impossible -- impossible -- for a single individual to put UBS's balance sheet on the line for billions without the proper authorizations. It. Is. Impossible.
I agree for the most part. One caveat to bear in mind with this bank is the exposure they may have had to the sudden and sharp decline of the swiss franc. This decline came out of the Swiss National bank's decision to peg the CHF to the Euro. In minutes the decline was over 9%. The decline for the month was even greater(others may have been forewarned). Anyone levered to that "safe" trade got destroyed. There is very little chance that this move did not have a negative effect on UBS just as there is very little chance this rogue trader was on his own.
So who tell's the Prime Minister then? The "rogue trader"? I don't think so.
His resignation likely has very little to do with what he did or did not know and much more to do with damage control for the board.
You've never seen a rich asshole smack "the help" for something he (or she, princess) fucked up before?
I had a guy put 2ea 10,000 share tickets in his drawer once... he bot the first 10 because he already had a bad position, the second 10 because his position was getting worse... he was long and wrong, and didn't want to get fired, but it only took a week to figure all that out... His P&L was only about 5 million total and we lost $50K when we covered...
But think about that, if this guy lost 2.3Bln in the week(s) it took to figure it all out his line must have been a trillion... not buying it...
How's that chief compliance officer doing? Internal audit? Risk management officer, CIO?
Many job openings coming to the economist classifieds
Ok, first step done. But it will be/is only a Bauernopfer, as long as those asshats in the second and third management line are still in charge. It needs a katharsis to kick them all out. The jpm's gs, ms, db's etc. will be happy to have one competitor less in the battlezone. Only time will tell who is or will be right. Next step, Villiger should go back to his brother, selling cigars or having speeches nobody is interested in at FDP audiences where basically nobody wants to follow his bs.
Some recent article about this abortion quoted some guy to the effect of "anybody who thinks you can push Gruebel around doesn't know Gruebel!" Well...
Also the new guy worked for a brokerage firm that went bankrupt, then was head of a bank that is going bankrupt, and now he's going to UBS!
The Board should be fucking shot, the buildings ground into dust, and the earth covered in salt, so that nothing ever grows there again...
that can be arranged too.
All this mess at UBS makes it more clear why the Swiss pegged their currency to the EUR at 1.20--bank was obviously overexposed at the time to other things besides gold and CHF. It makes clear as well why the Swiss have let their peg slip--damage at UBS has been dealt with. Without the intervention losses would have been--20, 30, 40 billion $US?
From all we know, it wasn´t fx exposure. It was stock indexes. So if he had held Dax or Eurostoxx futures / options etc., without the SNB intervention his losses would have been maybe 20 % bigger (assuming EUR/CHF at 1.0 and USD/CHF at .75), but not 1000 or even more %.
But obviously, CHF mortages in eastern Europe would been heavily under water. That could have been a bigger problem.
And swiss pension funds are obligated by law (!!) to hold at least 30 % of their AUM in US gov bonds. They´ve had serious problems aswell. A lot of them didn´t hedge their fx exposure.
So i think these were the bigger issues behind the EUR-peg.
Grübels resignation letter, translated by microsoft:
Springtime for Swiss Banks and Euro Currency.... music video
http://www.youtube.com/watch?v=yu2NqfISm9k&feature=related
swing it Grubeeee, cmon Bernanke, twist it...
UBS takes a hit.
couldn't happen to a nicer group
leave no one forget that UBS is where Phil Gramm landed when he left the Senate after greasing the skids for all that is still unfolding
I hope they don't fire Art Cashin.
Fuck him. He is a cocksucking bastard that spews forth lies on CNBS constantly. As if this POS is the oracle of the market. Fuck him and everyone else that gets on mainstream media. They are all paid whores...and will burn in hell.
The Investment Bank has a long standing problem with risk management with weak technology systems and weak desk oversight...where is a specific plan on how they fix the problems, or does it take a KPMG audit to state the obvious?...Removing Gruebel does not fix anything...they will be expanding again in 6 months time under a weaker CEO and moving into the next disaster, "prop" will continue to happen as they have close to zero control at a desk level.
just more golden parachutes...