UBS chairman: Subprime damage will take 'years' to repair

16-04-2008

UBS chairman: Subprime damage will take 'years' to repair
UBS chairman: Subprime damage will take 'years' to repair

UBS will take years to restore its reputation after its exposure to the US subprime market forced the bank to writedown £19 billion, its new chairman said.

In an interview with the Financial Times, newly appointed chairman Peter Kurer said: "We shouldn’t fool ourselves. We can't pretend there has been no reputational damage. Experience says it goes away after two or three years."

Switzerland-based UBS was Europe's biggest casualty of the financial market turmoil because of its large exposure to mortgage-backed assets.

The bank will need to rebuild capital and regain the trust of its investors if it is to recover from the crisis.

UBS has already taken its first steps, and two weeks ago announced an emergency rights issue of CHF15 billion (£8 billion).

But the appointment of Mr Kurer has not been received well by all its shareholders.

Luqman Arnold, UBS's former president, claims Mr Kurer – who is the bank's former counsel – does not have the banking background needed.

However, in his defence, Mr Kurer said: "The bank is an assemblage of specialists and I think I know the place.

"People should judge me on actions and not concepts. In the UK, you have a very purist approach on governance matters. It is not ideal to elevate someone from the inside, but the board has to evaluate a number of things."

"I have not accepted this job on an interim basis. The company needs leadership and needs to know who is at the helm."

Mr Kurer's comments came ahead of a shareholder meeting on April 23rd when his nomination and the rights issue will be put to a vote.

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