UBS said Tuesday that the co-heads of its global-equities unit resigned in response to the unauthorized trading that caused a $2.3 billion loss at the bank in mid-September. A former Bank of America-Merrill Lynch executive is now the sole leader of the unit.
“Carsten Kengeter, CEO UBS Investment Bank, has today accepted the resignations of Francois Gouws and Yassine Bouhara, co-heads of global equities, following the recently announced unauthorized trading incident,” UBS said in a press release. “Their resignations come as they assume overall responsibility for the effective management of the equities business.”
UBS also says that “appropriate disciplinary action” is being taken against other individuals in the equities business as a result of the revelation about the unauthorized trades and the arrest of UBS trader Kweku Adoboli last month in London. “UBS also expects to take disciplinary action against responsible staff in other functions,” the company explained in a statement.
Mike Stewart, who recently joined UBS from BofA-Merrill Lynch where he headed its global-equities division, is now the global head of equities operations at UBS, according to the bank. “He brings with him extensive market and leadership experience that is needed to ensure the sound management of the business and seamless execution of the firm's global-equities strategy,” it said in a statement.
Due to ongoing investigations, UBS says that is it providing no further details on the unauthorized trading incident at this time.
On Tuesday, UBS said that, despite the trading and a restructuring charge tied to cost cutting, it should report a modest net profit for the third quarter of 2011 on Oct. 25.
In addition, UBS expects to report net new money inflows in its wealth-management businesses “at levels broadly similar to those of the previous quarter,” it said. Global asset management, however, should report moderate net new money outflows.
Globally, UBS includes 11,065 advisors, about half of which are in the United States.
Also, UBS says it plans to continue with further cost cutting and job reductions through 2012. However, “UBS will continue to invest in growth regions, including Asia Pacific, the Americas, and the emerging markets, as well as in our global wealth-management franchise,” it said in a statement.
In late September, UBS CEO Oswald Gruebel resigned. He was replaced by interim CEO Sergio Ermotti, a former-Merrill executive, prompting many recruiters to say that the U.S. operations of UBS would be likely to see more departures and weak recruiting.