UBS Chairman, 3 Top Execs Quit in Hedge Fund Fallout

The chairman and three senior executives of UBS, the world's largest bank, resigned Friday after taking the blame for a $696 million charge related to exposure to Long-Term Capital Management LP, the failed U.S. hedge fund.

The resignations at the Swiss bank were the first among more than two dozen banks worldwide that had extended credit or taken investment positions in Long-Term Capital. The hedge fund amassed speculative bond and equity holdings of more than $100 billion before it failed last month and was taken over by a consortium of 14 banks and brokerages.

UBS, which has about $700 billion of assets, was created through the merger of Swiss Bank Corp. and Union Bank of Switzerland in June.

Analysts have largely blamed poor risk management by executives at the old Union Bank of Switzerland for UBS' losses from the investment in Long- Term Capital. In 1997, Union Bank of Switzerland lost more than $400 million on derivatives trading.

UBS chairman Mathis Cabiallavetta came from Union. So did two of the three other officials to resign-Felix Fischer, UBS' chief risk officer, and Werner Bonadurer, the chief operating officer of Warburg Dillon Read. The fourth man, interest rate chief Andrew Siciliano, came from Swiss Bank Corp.