UBS admitted its risk management controls
failed to kick in when systems picked up the estimated $2.3bn in
unauthorised trades in its global synthetic equity business.
In an internal memo to staff, interim CEO
Sergio Ermotti said there had been a “failure to exercise
appropriate controls”.
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“Our internal investigation indicates that
risk and operational systems did detect unauthorised or unexplained
activity but this was not sufficiently investigated nor was
appropriate action taken to ensure existing controls were
enforced,” Ermotti said.
Equity bosses resign over
scandal
UBS is carrying out an internal investigation
into the trades and announced this week that its co-heads of global
equities, Francois Gouws and Yassine Bouhara, had resigned as a
result of the trading scandal.
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By GlobalData“Firm disciplinary action will be taken
against further individuals in equities and across other
responsible functions,” Ermotti added.
UBS sends mixed Q3
message
The Swiss banking giant expects a “modest”
group net profit and net new money (NNM) inflows in its wealth
business for the third quarter of 2011.
The group net profit includes approximately
CHF400m ($435m) of restructuring charges associated with the bank’s
cost-reduction programme, and a $2.3bn loss from unauthorised
trading at its London-based investment arm in September.
UBS added it will continue to invest in its
global wealth management franchise, as well as Asia-Pacific, the
Americas and emerging markets.
