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Photo taken on February 9, 2010 shows Oswald Gruebel, chief executive of Swiss Bank UBS taking part in the banks annual press conference in Zurich. (SEBASTIAN DERUNGS/AFP/Getty Images)
Photo taken on February 9, 2010 shows Oswald Gruebel, chief executive of Swiss Bank UBS taking part in the banks annual press conference in Zurich. (SEBASTIAN DERUNGS/AFP/Getty Images)

UBS chief won't resign as bank ups loss from rogue trades to $2.3-billion Add to ...

Oswald Gruebel, the chief executive of UBS, has dismissed calls for his resignation as politically motivated, even as the Swiss banking giant raised its estimated loss by a rogue trader to $2.3-billion.

UBS AG had previously put the loss at $2-billion when news of the scandal first broke Thursday.

In a bid to reassure investors, the Zurich-based bank said Sunday it has “now covered the risk resulting from the unauthorized trading” and its equities business “is again operating normally within its previously defined risk limits.”

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UBS also confirmed for the first time that the trader, 31-year-old Kweku Adoboli, was already under investigation by the bank when he revealed his actions to authorities Wednesday.

“The loss resulted from unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months,” UBS said, adding that the magnitude of the bank's risk exposure was hidden by fake trades.

Mr. Adoboli remains in custody in London, charged Friday with acts of fraud and false accounting dating back to 2008. His next court appearance is Thursday.

The fact that the fraud took place over three years raises serious questions about the bank's ability to manage its risk. UBS said it has set up a special committee chaired by David Sidwell, the bank's senior independent director, to investigate the incident.

But speaking for the first time since UBS revealed the loss Thursday, Mr. Gruebel told the Swiss weekly Der Sonntag that the loss couldn't have been prevented.

“If someone acts with criminal energy, then you can't do anything. That will always be the case in our business,” he said in the interview published Sunday.

But some Swiss politicians and commentators have called for Mr. Gruebel's head to roll over the loss, which is likely to put UBS's third-quarter results deep in the red. Such a move would signal defeat for the gravel-voiced German, who was brought in more than two years ago to revive the bank's fortunes after a series of missteps that included vast losses in the U.S. subprime mortgage market and an embarrassing U.S. tax evasion case.

Mr. Gruebel told Der Sonntag that he has no intentions of resigning.

“I'm responsible for everything that happens at the bank,” Mr. Gruebel told the paper. “But if you ask me whether I feel guilty, then I would say no.”

Mr. Gruebel pledged to stamp out risky business practices at UBS when he came out of retirement in early 2009 to take the helm of Switzerland's biggest bank. UBS had just suffered its biggest losses ever due to mistakes by the very investment unit that is now making headlines again, and had to take a $60-billion bailout from the Swiss government to stay afloat.

Swiss media on Sunday cited unnamed UBS board members saying 67-year-old Mr. Gruebel retains the confidence of major shareholders, including the Government of Singapore Investment Corp. The sovereign wealth fund holds more than 6.4 per cent of UBS's stock, whose value dropped almost 10 per cent following the announcement about the fraud.

Mr. Gruebel is expected to survive until at least Nov. 17, when he is presents investors with an update on the bank's activities. Banking experts in Switzerland have suggested the investors day may be used to announce a downsizing or even a spin-off of the investment unit.

In a previous case of rogue trading causing massive losses, the chairman of French bank Societe Generale, Daniel Bouton, stepped down more than a year after the bank revealed that a single trader lost €4.9-billion ($6.7-billion). Mr. Bouton said that repeated attacks on him were becoming a threat to the bank's health.

So far, it is unclear who could even replace Mr. Gruebel.

The only name that has been mentioned is that of Sergio P. Ermotti, chief executive of the bank's Europe, Middle East and Africa business. Promoting Mr. Ermotti would satisfy those who want to see a Swiss at the head of the country's most important financial institution, to counterbalance incoming chairman Axel Weber, another German and a former president of Deutsche Bank.

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