Recently Swiss bank UBS, the world’s largest private bank, announced it had introduced a new employee code of ethics and conduct. All of its 69,000 employees are required to read the code, pass a test, and sign it. “There are no exceptions,” explained the bank’s CEO, Oswald Gruebel, and Chairman Kaspar Villiger, in the preface to the code.
“Ignorance of the code, applicable laws and regulations, UBS policies or good business practices is not an acceptable justification for violation of the principles set out in the code,” they said.
The code deals with everything from complying with the laws and regulations to ethical behavior. Here is a brief overview of the code:
- Compliance with laws, rules, and regulations: All UBS employees and directors are expected to comply with the laws, rules and regulations of the countries where the company operates as well as its own internal policies, guidelines and procedures.
- Combating financial crime: UBS is committed to assisting in the fight against money laundering, corruption and terrorist financing.
- Tax matters: UBS complies with all applicable laws and regulations regarding tax records and tax reporting and does not provide assistance to clients in acts aimed at breaching their fiscal obligations.
- Disciplinary measures: UBS does not tolerate violations of the code or other internal and external policies and rules, and will take appropriate action to address violations.
Why UBS Needs the Code
You’ve heard of Swiss banks allowing clients to hide money from authorities in order to avoid paying their government’s taxes? It’s not just a cliché. UBS agreed to pay U.S. authorities $780 million in February to settle accusations that it helped rich Americans evade taxes. Last August, the bank finalized a deal with the U.S. Justice Department and Internal Revenue Services (IRS).
Villiger and Gruebel wrote in the preface, “In the new UBS, we will uncompromisingly treat our reputation as our most valuable asset and we will protect it fiercely.” Smart Money.com pointed out that the U.S. investigations “affected the reputation of UBS’ flagship private bank, with clients leaving in droves.” UBS lost $16.47 billion worth of funds from wealthy clients in the third quarter.
Business Week quoted Gruebel as saying that it is “imperative” for UBS to stop wealthy clients from withdrawing money after six quarters “of net outflows that have undermined profit at the bank’s biggest division.”