UBS Names Lofts Chief Risk Officer, Replacing Miskovic After Trading Loss
UBS AG (UBSN), the Swiss bank that reported a $2.3 billion loss from unauthorized trading in September, appointed Philip Lofts as chief risk officer, replacing Maureen Miskovic, who is leaving the firm after less than a year.
Robert McCann, head of wealth management for the Americas, will also assume Lofts’s previous role as chief executive officer for all business in the Americas, the Zurich-based bank said in a statement today. Chief Operating Officer Ulrich Koerner, 49, will take on additional responsibility for business in Europe, Middle East and Africa, the role filled by Sergio Ermotti before his appointment as the bank’s CEO last month.
The shuffle is the first management move by Ermotti since he was confirmed as CEO on Nov. 15, following the trading losses that prompted the resignation of his predecessor, Oswald Gruebel. Miskovic, 54, a former risk officer at State Street Corp. and Lehman Brothers Holdings Inc., joined UBS in January as Lofts relinquished the risk post to move to the U.S.
“With this appointment and the previous chief risk officer leaving, UBS confirms that risk management procedures were far from perfect,” Christopher Wheeler, a London-based analyst at Mediobanca SpA, said in a note. He has an “underperform” rating on UBS shares.
Miskovic’s departure isn’t related to the unauthorized trading, UBS spokeswoman Tatiana Togni said by phone, declining to comment further.
UBS fell 0.4 percent to 11.13 francs at 11:10 a.m. in Zurich trading, bringing its decline this year to 27 percent. That compares with a 34 percent drop in the 46-company Bloomberg Europe Banks and Financial Services Index (BEBANKS) over the same period.
“One of my main priorities is to continue to reinforce the bank’s risk framework,” Ermotti said today in a memo to employees that was confirmed by UBS. When Lofts headed risk management “between November 2008 and December 2010, he demonstrated that he has the broad skills and experience and the strong leadership needed to run our risk organization decisively in a turbulent market environment.”
Ermotti told employees in October that while the bank’s internal systems had detected “unauthorized or unexplained” activity, it wasn’t “sufficiently” probed and controls weren’t enforced.
Kweku Adoboli, the trader accused of causing the trading loss, was given a four-week delay on Nov. 22 to enter a plea to charges. Adoboli has been in custody since Sept. 15, when UBS asked London police to arrest him.
The incident also led to the replacement of Francois Gouws and Yassine Bouhara as co-heads of the equities unit, where the loss occurred. UBS also suspended or took disciplinary actions against eight other employees at the investment bank.
Investment Bank Downsizing
Lofts, a 49-year-old British citizen, has been with UBS for more than 20 years. He also served as the chief credit officer for three years, and has worked at the investment bank in various business and risk-control positions in Europe, Asia and the U.S.
Ermotti last month announced a plan to scale down UBS’s investment bank, by cutting 145 billion Swiss francs ($159 billion), or almost half, of risk-weighted assets at the unit by 2016 as stricter Basel III capital rules and Europe’s sovereign debt crisis hurt profit. UBS also said it will aim for closer cooperation between divisions.
Wealth Management Lead
The appointment of McCann as Americas chief signals that “the lead is now in the hands of the wealth management,” Wheeler said in the note. “These are all positive messages and will shift the focus of the entire organization towards a unique goal: restoring UBS leadership in wealth management.”
McCann, who joined UBS in October 2009, previously headed wealth management at Merrill Lynch & Co. His other former positions at Merrill included chief operating officer of global markets and investment banking, and head of global securities research and economics.
“He heads our largest business in the Americas with 16,000 employees, and is the natural choice for the Americas CEO position as we strengthen the partnership across the three businesses,” Ermotti said in the memo.
Koerner was brought to UBS by Gruebel in April 2009 from rival Credit Suisse Group AG, which Gruebel headed previously. At Credit Suisse, Koerner served in roles including chief financial officer, chief operating officer and CEO of business in Switzerland.
“Ulrich has a strong track record in managing diverse businesses, delivering results in collaboration with different parts of the bank and in fostering client relationships,” Ermotti said in the memo.
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