Banking StandardsLetter from Huw Jenkins

Letter Relating to Question 2241

Thank you for the opportunity to attend the Select Committee Hearing on Banking Standards at Portcullis House on 10 January 2013.

The Chairman, in his closing remarks, stated that the former UBS senior managers present had been guilty of gross negligence and were out of their depth. This appeared to be a personal statement by the Chairman rather than as a question: it was certainly not put to me individually nor did I have time to formulate my reply before he moved on. At no time throughout our evidence was any consideration given to the materiality of the UBOR setting process in the context of the size, scale and complexity of UBS’s business and the finding of three regulatory bodies that we were unaware of this issue, and that five internal audit reports failed to identify it, were completely discounted. For the record I strongly refute the conclusion that I was negligent as I said in my oral testimony. I am also somewhat surprised by the statement bearing in mind that after very in depth investigations by regulators in the US, Switzerland and the UK, which I understand included the review of many 10,000s of internal UBS documents, they reached the very clear conclusion that knowledge of these widespread practices had not reached or been condoned by senior management within the bank.

I, and my colleagues, made it clear that we deeply regretted both the conduct and the fact that we did not spot this issue at the time, but at all times I acted in good faith to address the risk and other issues that we considered to be the priorities at the time. With hindsight those issues could have been better prioritised but that clearly does not constitute negligence. Indeed we candidly accepted that both the risk systems within UBS has become too formulaic and that the appalling conduct of which we are now aware evidences the failings of the culture in UBS, but this cannot be seen as a snapshot of any one person’s failings or incompetence but rather the result of an industry that had been allowed to set its own agenda for far too long.

15 January 2013