THE CHIEF EXECUTIVE of UBS has resigned over an “unauthorised trading incident” which could cost Switzerland’s largest bank up to $2.3 billion in losses.

Alleged rogue trader Kweku Adoboli, 31, was arrested last week after the losses emerged and charged with acts of fraud and false accounting which are understood to date back to 2008. Adoboli was based in the bank’s London office and apparently alerted UBS to the losses himself.

UBS CEO Oswald Gruebel had earlier said that although he felt responsible for the losses, he was not considering stepping down as CEO. However, today UBS says its board of directors has accepted Gruebel’s resignation.

UBS Chairman Kaspar Villiger says in a statement today that Gruebel feels “that it is his duty to assume responsibility for the recent unauthorised trading incident. It is testimony to his uncompromising principles and integrity.” Villiger said that Gruebel had achieved “an impressive turnaround” and strengthened UBS during his time as group chief executive.

Gruebel came out of retirement to take over as head of UBS in 2009 after the bank suffered heavy losses in 2008 and almost collapsed as a result of missteps in its investment wing – the same department involved in this alleged rogue trading.

Regarding the unauthorised trading’, the statement says:

The board is deeply disappointed by the recent loss arising from unauthorised trading. It will fully support the independent investigation and will ensure that mitigating measures are implemented to prevent such an incident from recurring.

Villiger says UBS is committed to further expansion in the wealth management area, but that “in the future, the Investment Bank will be less complex, carry less risk and use less capital to produce reliable returns and contribute more optimally to UBS’s overall objectives”.