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Ethos 'unsatisfied' with UBS' answers

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  • Ethos 'unsatisfied' with UBS' answers

SWITZERLAND - The Swiss pension fund-owned asset manager Ethos has described the answers UBS provided to its shareholders to explain its losses during the subprime crisis as unsatisfactory, and is still pushing for an external audit of activity.

"The answers provided, in particular those concerning the functioning of the risk management and control systems cannot be considered satisfactory," Ethos said in a statement today.

Consequently, the organisation maintains its request for a special audit and today again urged the shareholders to support its request.

UBS sent out an invitation to its shareholders earlier this month, concerning the EGM on February 27, in which it recommends shareholder vote against both Swiss asset manager Ethos' call for such an external audit into the losses, and against Pensionskassen Profond's call for a change in the capital increase strategy.(See earlier IPE story: UBS completes French push)

In the invitation, the bank announced it would answer all questions posed by Ethos regarding the losses attributable to shareholders - which have recently been reported as worth CHF4.4bn (€2.7bn) - during the EGM and continue internal audits into the issue.

Ethos said its analysis of the answers provided by UBS leaves open several questions, arguing, for instance: "The statement regarding the separation of risk management and risk control functions, as required by the Swiss Federal Banking Commission (SFBC) [...] does not seem convincing."

Moreover, Ethos writes today a circular by the SFBC made clear the remuneration system of the risk control employees should be free of elements that could generate conflicts of interest.

"However, UBS admits the variable part of the remuneration of these employees, while not directly dependent on the sectors they control, is related to the financial
performances of the bank," added the organisation.

UBS said in a statement it is "not surprised" by Ethos' claims from today. "Ethos already recommended a special audit prior to the publication of the answers to its questions on February 14, 2008," a spokesman commented to IPE.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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