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UBS Problems Spur Management Upheaval

The subprime mess and allegations of tax evasion schemes are just some of the issues responsible for tarnishing the reputation of UBS AG. For months now, a string of crises has fueled speculation about the fiscal health of the Swiss-based investment firm. In the last year, the company saw its stock price fall some 85%, experienced $18 billion in losses and cut thousands of jobs.

Last month, the U.S. government sued UBS in an attempt to force the bank to reveal the identities of up to 52,000 American clients who allegedly hid secret Swiss accounts from U.S. tax authorities. Prior to the lawsuit, UBS struck a deal with U.S. prosecutors on Feb. 18 by agreeing to pay $780 million and provide the names of up to 300 individuals who may have avoided paying taxes by stashing money in Switzerland.

Fallout from tax evasion scandal has led UBS to clear out its top management. On Feb. 26, the company appointed Oswald Gruebel, who engineered the turnaround at competitor bank Credit Suisse, as its new chief executive. Gruebel replaced Marcel Rohner, who had been on the job as CEO at UBS for only 18 months.

On March 3, UBS announced that Kaspar Villiger would replace Peter Kurer as chairman of its board of directors.

Since the beginning of the subprime meltdown, UBS has amassed more than $50 billion in writedowns and losses, forcing the firm to reduce its workforce by 11,000 jobs.

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