Sergio Ermotti, the new chief executive officer of UBS AG, made his first high-profile management changes, ousting the bank's risk-control officer and bringing back a veteran who helped clean up deep-seated oversight problems that emerged during the financial crisis.
Ermotti, who became CEO last month, on Thursday removed Maureen Miskovic as the bank's chief risk officer after less than a year on the job. He brought back Philip Lofts, who held the job between 2008 and 2010 before becoming head of UBS's America business.
The move is the highest-level change in UBS's risk-control department since a trading scandal struck the bank in September. Unauthorized trades by a staff member on UBS's London equities desk caused $2.3 billion in losses. The scandal forced the resignation of CEO Oswald Grübel in September, followed later by a handful of top executives in the equities business. In recent weeks, UBS has also disciplined other, unidentified managers in risk control, operations and finance.
Miskovic joined UBS in January from State Street Corp., where she was chief risk officer. She held the same position at Lehman Brothers between 1996 and 2002. While UBS didn't hold Ms. Miskovic directly responsible for the trading scandal, Ermotti didn't feel she was the right person for the job, according to a person familiar with the situation.
A person familiar with Ms. Miskovic's thinking said that she decided the chemistry between her and Ermotti wasn't right and preferred to step aside to let the new CEO build a fresh team.
UBS has said the London based-trader, Kweku Adoboli, was able to make the unauthorized trades in part because bank managers failed to adequately confirm some of his trades with counterparties outside the bank, a violation of UBS's internal rules. London police have charged Adoboli with fraud and false accounting in the case. Adoboli hasn't entered a plea in the case.
In bringing Lofts back to the top risk position, UBS is turning to a veteran of the bank who first stepped into the job in 2008, when the bank was on the verge of collapse under the weight of $50 billion in illiquid securities. Lofts helped manage the writedowns of these securities and oversaw a wholesale revamp of UBS's risk-control and risk-management functions. That revamp, however, focused on serious problems at UBS's fixed-income division—the source of the huge losses—and far less on the equities division, considered a tightly run unit.
A person familiar with the situation said that Swiss regulators, who have kept UBS under tight control since Swiss authorities had to bail out the bank in 2008 and who are conducting an inquiry into the September trading scandal, approved the appointment of Lofts.
Miskovic had been relatively unusual as an outsider brought into a top risk position at UBS. Some inside the bank criticized the fact that former risk-control executives who failed to prevent the massive securities losses remained with UBS after the financial crisis. Others instead say that those insiders helped the bank to act quickly during the turmoil.
Bob McCann, currently head of UBS's U.S. wealth management business, will also take over from Lofts as head of the Americas business. Ulrich Körner , currently group chief operating officer, will also become the head of Europe, Middle East and Africa, a job Ermotti held until assuming the top job. Körner joined UBS in 2009 from Credit Suisse Group, where he gained a reputation as a turnaround specialist.
This story first appeared on WSJ.com.
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