REUTERS/Ruben Sprich
- UBS chairman apologized for the loss the Swiss bank suffered amid the Archegos meltdown, in an interview with Bloomberg.
- Chairman Axel Weber blamed the lack of oversight particularly in family offices, which don't have to disclose information about investments.
- Weber said UBS is conducting an internal investigation into the fiasco.
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UBS Group Chairman Axel Weber apologized for the loss the bank suffered amid the Archegos Capital Management meltdown in March.
The Swiss bank announced a surprise $861 million loss in relation to the liquidation of fund manager Bill Hwang's Archegos family office, which had highly leveraged positions in a handful of stocks.
Weber in an exclusive interview on Bloomberg TV blamed the lack of oversight particularly in family offices – entities typically established by wealthy families – which don't have to disclose information about the firm to regulators, unlike hedge funds.
Weber urged regulators like the US Securities and Exchange Commission to enforce more transparency, adding that without action from official agencies, UBS itself would force more transparency at the bank.
"If it's not enforced by regulators, we will enforce it because we need that information," Weber told Bloomberg Wednesday. "If we finance activity, we want these disclosures and if clients are unwilling to give that, well there may be other banks that give them that same exposure, but it won't be us."
Given the "unusual" situation, Weber revealed that UBS is conducting an internal investigation to get to the root of the issue. The chairman did clarify that they are not subject to regulatory action.
"We're not very happy with this event," he said. "I'm hyper-focused on this ...We've not changed our risk appetite. This was not within what should have happened. So we need to get to the bottom."
Weber also clarified that no one will be stepping down at the bank as a result of the episode, adding that it was the process that needed improvement.
"I don't see a single failure of a single part of the organization," he said. "But what I do see is that the number of combinations that interacted wasn't very good and so we need to improve each and every element of that so that those interactions don't happen again."
UBS, the world's biggest wealth manager, joins Credit Suisse, Nomura Holdings, and Morgan Stanley which all lost billions of dollars in the wake of the Archegos blow-up.
The implosion of Archegos caused widespread chaos on Wall Street and exposed the fragility of the financial system, especially in lesser-known areas of the market such as total return swaps.
The founder grew his family office's $200 million investment to $10 billion but did not need to register as an investment advisor since he was only managing his own wealth.
Hwang, a former Tiger cub, reportedly lost a staggering $8 billion dollars in 10 days.