How one rogue trader’s actions have inspired changes at UBS

David Hellier
Follow David
THE UBS of today is quite a different bank to the one that employed Kweku Adoboli up to the time of his fraud last year.

It has a different chief executive, following the departure of Oswald Grubel very shortly after the scandal broke, and it has a finely tuned strategy that now emphasises the client-focused and advisory activities of the investment bank, rather than the riskier and more complex trading strategies that were sometimes a bit too prominent.

Chief executive Sergio Ermotti, who joined UBS from UniCredit in April last year, has brought in one of his former allies, Andrea Orcel, from Bank of America Merrill Lynch, where he worked for 18 years. And Orcel, who is very much a relationship advisory banker, now leads an investment bank that has put equity advisory at the top of its focus.

“I think the whole trading scandal has tilted UBS in the right direction,” said a banker yesterday. “It is best sticking to the traditional activities the bank was always so good at.”

Recently UBS said it planned to trim about SFr100bn of risk-weighted assets by the end of 2017, after already cutting a similar amount over the past year. The investment bank said it would focus on its advisory businesses, equities, foreign exchange and precious metals, while keeping limited capabilities in rates and credit.

Insiders say the Adoboli case did not fundamentally impact on the bank’s strategy. “The strategy of the bank is quite definitely not linked to this case, it was in the process of being developed for some time,” said one source yesterday. But there is a feeling that UBS has arrived at where it is today quicker than it would have done if it had not been for the fraud that at one stage seemed to knock it off balance.