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Singapore's GIC hits out at UBS lapses

09-21-2011 13:47 BJT

SINGAPORE, Sept. 21 (Xinhua) -- The Government of Singapore Investment Corporation (GIC), the largest shareholder of Swiss bank UBS, has expressed "disappointment" to the bank's board over the lapses relating to the recent 2.3 billion U.S. dollars loss from unauthorized trading.

Local daily the Business Times said in a report on Wednesday that the senior management of UBS, including chief executive officer Oswald Gruebel, met with representatives of GIC on Tuesday.

"GIC expressed disappointment and concern at the lapses and urged UBS to take firm action to restore confidence in the bank," GIC said.

"GIC sought details of how UBS is tightening the control environment and looks forward to the conclusions of ongoing investigations," it added.

GIC, one of the world's most influential sovereign wealth funds, invested some 11 billion Swiss francs (12.4 billion U.S. dollars) in March 2008 to take a 6.41 percent stake in Switzerland's largest bank.

It is estimated that the fund still suffers a loss of 6.5 billion Swiss francs (7.3 billion U.S. dollars) even after receiving 1.98 billion Swiss francs in coupon payments in the first two years.

GIC has defended its investment decisions, saying that the investment in UBS was made before the onset of the global financial crisis and that it has made good investment decisions elsewhere to offset the losses from its investment in UBS, and that its portfolio has fully recovered to its value prior to the global financial crisis.

The firm has a 20-year annualized real rate of return of 3.9 percent, in excess of global inflation, according to its annual report.

It said that it does not disclose strategies or details of specific investments to preserve its competitive edge, and that its investment objective is to achieve good long-term returns.

The stock of UBS plunged 10 percent last Thursday upon the bank 's disclosing the huge loss from unauthorized transactions in derivatives by rogue trader Kweku Adoboli.

Gruebel had said he was not planning to resign over the fraud, though he acknowledged that any executive changes were a decision of the board.

 

Editor:Yang Jie |Source: Xinhua

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