Monday's Headlines: New UBS CEO faces big challenges after Gruebel quits

UBS's new CEO Sergio Ermotti faces significant challenges after the departure of Oswald Gruebel in the wake of a massive rogue trading scandal, news media report. Gruebel resigned following a board meeting in Singapore, in which the board backed him as CEO but failed to support his overhaul plans for the bank, the Financial Times writes.

Sergio Ermotti, UBS's former head of Europe, Middle East and Africa was appointed interim CEO. Ermotti previously worked at UniCredit and Merrill Lynch, according to Bloomberg.

"We are aware that we are facing turbulent times externally and this latest incident is only adding much more necessity for us to react. But let's not forget that UBS is one of the best capitalized banks worldwide," Ermotti said, according to Reuters.

After the change was announced, Ermotti told reporters that the rogue trading losses revealed "totally unacceptable" risk exposure and that his priorities would be to asses the bank's controls and determine how the losses occurred, Reuters says.

Other News:

Proposed Volcker bank rule may restrict how market-making traders are paid. [Bloomberg]

Citigroup's first annual board meeting in Asia underlines recent growth, troubles. [Wall Street Journal]

BNP CEO says bank is solid, doesn't need to borrow US dollars from ECB. [Financial Times]

Goldman president Cohn says blame bad risk management, not complex products for bank failures. [Bloomberg]

Merrill Lynch builds new wealth and retirement solutions unit amid restructuring. [On Wall Street]

HSBC chairman Flint to take over Institute of International Finance leadership next year. [Reuters]

JP Morgan's Dimon lashes out at Canada's central bank chief over proposed capital surcharge rules. [Financial Times]

South Korea regulator says recent loan troubles unlikely to hurt other banks. [Wall Street Journal]

US sues AIG over $62 million tax credits received in foreign financing deals. [Financial Times]

Bank of America plans to sell correspondent mortgage business to Fortress Investments. [Wall Street Journal]

German banks must be ready for more trouble from Greek crisis, bank group says. [Reuters]