Monday, April 21, 2008

UBS Blames One Guy

UBS (UBS) laid much of the blame for their current difficulties at the feet of former investment banking Chief Huw Jenkins. So he was the guy. Glad we figured it out. The news slipped out when an excerpt of a report to Swiss banking regulators was released to the press. The excerpt was released only after shareholder pressure. Many thanks to Ethos Fund for doing the heavy lifting. The report was approximately 400 pages and UBS only released a summary.

According to various news outlets the report fingers Huw Jenkins as distracted, and ineffectual. There are also claims that he had inadequate fixed income experience. Hey did anyone read his resume before they offered him the job.

The WSJ reported that “In the report, UBS faults Mr. Jenkins with keeping bank management and Chairman Marcel Ospel in the dark about the losses until August, several months after Dillon Read had been shut down for its losses.”

I have not been able to identify how long the regulator spent laughing after the report was presented. UBS obviously tried to beef up the reports credibility as WSJ further reported that ...The report was prepared by UBS's legal counsel Peter Kurer, who is set to replace long-standing chairman Ospel Wednesday, in conjunction with legal counsel from law firms Sullivan and Cromwell and Homburger AG, as well as auditor PriceWaterhouseCoopers.

Its about the governance and the entire risk management apparatus that supports it. UBS failed. Point the finger at the Board for failing to protect shareholder interests. If Huw Jenkins fooled them then shame on them.