UBS blames slack controls for credit losses


Poor risk control and a narrow focus on revenue growth at UBS helped cause huge credit losses, the investment bank said yesterday.


UBS officials will meet restive shareholders this week. The sub-prime-battered bank blamed itself for a lack of risk control in a report ordered by Switzerland’s EBK banking watchdog and said it had let the rapid build-up of its investment bank run out of control.
“The bank was focused on the maximisation of revenue. There appears to have been a lack of challenge on the risk and reward to business area plans,” UBS said about its fixed-income business.


Other problems were confusion about management structures and cheap internal funding, the report said. There were gaps in risk management and expertise, and the bank did not respond adequately when the sector started worrying about sub-prime exposure.


The report was a summary of a review UBS had sent to the EBK, which is probing the bank over its losses.


“We will proceed with our investigation. This is quite a big thing and it will take a lot of time,” the watchdog’s spokesman Alain Bichsel said. (Reuters)