Gruebel: Swiss banks' rescuer who falls on rogue trading

24th September 2011, Comments 0 comments

It was to former Credit Suisse boss Oswald Gruebel that UBS turned when the bank was struggling to stem its record losses amid the financial crisis and seek a way out of its bitter tax evasion spat with the United States.

Gruebel had engineered Credit Suisse's own recovery in the early 2000s, after the bank took massive charges arising from the Enron scandal. Within a year, the bank returned to profitability.

Likewise at UBS, Gruebel managed to restore the bank's profitability around 18 months after he took over the helm.

However, Gruebel has now been forced to resign after UBS was hit with an internal crisis on his watch -- the discovery of unauthorised trades allegedly made by trader Kweku Adoboli which lost the bank $2.3 billion.

Born November 13, 1943 in eastern Germany, Gruebel entered the banking industry as an apprentice at Deutsche Bank.

He later joined White Weld Securities, a subsidiary of Schweizerische Kreditanstalt, the former name of Credit Suisse, and became a member of the Credit Suisse executive board in 1991.

Gruebel retired at the end of 2001 but was brought back just six months later as the head of Credit Suisse financial services.

Swiftly, he was asked to take over as joint CEO in September 2002 during Credit Suisse's darkest hour.

It was his reputation at the rival bank that led UBS to rouse Gruebel out of his retirement for the second time.

In the statement announcing that he was to take over from Marcel Rohner, the bank said: "With his previous employer Credit Suisse, Mr Gruebel was the architect of a successful turnaround and restored confidence in the company in turbulent times."

Within minutes of taking the reins, the straight talking banker told his staff that massive cost cuts were imminent.

Since 2009, the bank has slashed thousands of jobs, cutting the bank that was getting too large to govern to size.

Investors heaved a sigh of relief when the bank not only became profitable again in the third quarter of 2010, but also stemmed an outflow of client assets for the first time since the financial crisis.

Mindful of the public resentment against bankers with fat pay checks, Gruebel, nicknamed "Ossie", voluntarily renounced his bonuses for 2009 and 2010.

While he may have won the respect of investors and employees, the German recently ruffled some feathers when he criticised the Swiss National Bank for its move to put a cap on the franc's rate against the euro.

The trading scandal at UBS has also made some question his leadership style.

UBS' honorary chairman Nikolaus Senn criticised Gruebel for his over-reliance on the controls system to uncover problems, instead of going to get a proactive grip on the situation.

"I don't know how many times Oswald Gruebel flew to London in order to understand from the managers on site what was going on," Senn told Swiss German television.

The Financial Times meanwhile quoted an unnamed trader saying that the problem was that "no one questions Ossie."

UBS said Saturday its board "regrets" Gruebel's decision to quit but Chairman Kaspar Villiger said he "feels that it is his duty to assume responsibility for the recent unauthorised trading incident."

Villiger praised Gruebel for "his uncompromising principles and integrity", and acknowledged that during his tenure "he achieved an impressive turnaround and strengthened UBS fundamentally."

© 2011 AFP

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