The two other people on the investigative committee are board members Ann Godbehere and Joseph Yam. Godbehere was CFO of Northern Rock Plc until 2009, and held the same position at Swiss Reinsurance Co. from 2003 to 2007. Yam is the former head of the Hong Kong Monetary Authority.
The trading loss may hurt the bank's credit rating, Moody's Investors Service said today in its Weekly Credit Outlook.
"This development points to ongoing weaknesses in UBS's risk management and controls and is credit negative for the bank," the report said. "If management is unable to increase investment banking revenue while appropriately containing risk, it will further set back profitability with negative effects on the bank's credit quality."
Jobs 'Under Scrutiny'
UBS had to raise more than $46 billion in capital from investors, including the Swiss state, to make up for the record losses during the credit crisis. The bank's tier 1 capital at the end of the second quarter was 37.39 billion francs ($42.3 billion), giving it a tier 1 capital ratio of 18.1 percent.
The investment-banking unit had pretax earnings of 1.21 billion francs in the first half of 2011, while UBS as a whole had net income of 2.82 billion francs in the period.
UBS said last month it will eliminate about 3,500 jobs, with about 45 percent of the reductions coming from the investment bank, as stricter capital requirements and market turmoil hurt the earnings outlook. The bank in July scrapped the target of doubling pretax profit from last year's level to 15 billion francs by 2014.
Appeasing Shareholders
Gruebel and Kengeter, 44, have been trying to revive earnings at the investment bank for two years. They hired more than 1,700 people across the division and brought in new business heads to replace those that left or were fired. They've also increased risk-taking.
The measures brought limited benefits. UBS's share among the nine biggest investment banks of revenue from trading stocks and bonds and advising clients on capital-market transactions and mergers more than doubled from 2009 through the first half of this year, yet it remained the lowest.
UBS was aiming for annual savings of 2 billion francs by the end of 2013 through the latest job cuts. More reductions are likely following the trading loss, analysts and recruiters said.
"If you are looking to appease shareholder expectations that means finding other ways to improve earnings, such as cutting costs," said Jon Nicholson, a managing director in London at recruiting consultant Astbury Marsden. "The bonus pool will be affected and people's jobs will be under scrutiny."