In Switzerland, back in 2009, Oswald Grübel was a demi-god. The German banker – as gruff as he was revered – had steered Credit Suisse so effectively through the boom years that, only 20 months after retiring in 2007, the Swiss establishment was begging him to do his national duty and come to the aid of the country’s other giant bank.

UBS was in a parlous state. By the time Mr Grübel took up the job in February 2009, the bank had identified $60bn of toxic assets, which it hived off into a government-backed “bad bank”, and had racked up $50bn of losses.

In the immediate aftermath of the 2007-08 crisis, the bank had lurched from one problem to another under a succession of senior managers. But now Ossie was here – and the Swiss establishment believed everything would be all right. It has not turned out that way. The question bankers and regulators are asking now is: was the alleged rogue trading revealed this week the fault of Mr Grübel and a natural consequence of the way he managed the bank?

In many ways, the evidence points the other way. The UBS that Mr Grübel runs today is a very different beast from the one he inherited. Total assets, for example, have been cut back sharply – from SFr2,000bn ($2,283bn) at the end of 2008 to SFr1,300bn by the end of 2010.

He has also restored profitability – turning 2008’s SFr21bn loss into a SFr7.5bn net profit last year. And the investment bank was starting to get back on track. Carsten Kengeter, the man hired from Goldman Sachs in 2008 to repair the fixed-income business, was rapidly promoted by Mr Grübel to head the whole investment bank.

At the same time, he has been strengthening the bank’s capital base to bring it into line with tough new requirements set by Switzerland’s regulatory regime.

But with the twin pressures on profitability of tougher capital requirements and the ongoing legacy of cleaning up the first phase of the financial crisis, the order went out last year that it was time for the bank to start taking a little more risk again.

No one can agree about the extent to which that has influenced the attitude of traders within the bank.

Adding to the mix has been the ongoing effect of job cuts at the bank and the way it has struggled to hire and retain the best people, according to headhunters.

“They were struggling anyway to hold on to people. Now everyone wants to leave,” said one City recruiter.

But if Mr Grübel was lauded by Swiss politicians and shareholders alike for his work in repairing UBS’s balance sheet, not to mention steering it through a damaging private banking tax row in the US, the blunt-speaking banker from Germany has done little to keep the establishment on side – criticising regulatory reforms at every turn, lambasting politicians.

According to one person who has worked with Mr Grübel, the banker is driven by a mission to rebuild UBS in the way that Hermann Josef Abs in the 1950s revived Deutsche Bank – and by extension much of the post-war German financial system.

But with the latest trading scandal as evidence, some of those earlier supporters have begun questioning his style, drawing comparisons with Sir Fred Goodwin, the disgraced former chief executive of Royal Bank of Scotland, whose autocratic management went unchecked by fellow directors and led to the biggest bank blow-up of the crisis. “No one questions Ossie, that’s the trouble,” said one banker who knows him.

Such judgments would dismay Mr Grübel, who most agree came out of retirement for no other reason than to do his bit for Switzerland, and has taken a moral stand on a range of issues – including his own pay.

Either way, Swiss officials say that even before the latest blow-up – which a strongly capitalised UBS can absorb financially – support was swinging away from Mr Grübel. It was no accident that it was Swiss National Bank governor Philipp Hildebrand who over the summer made the first approach to Axel Weber, the tough-talking former Bundesbank boss, to be UBS’s next chairman. When Mr Weber starts as deputy chairman next year, the dynamic at the top of UBS is sure to change dramatically.

Additional reporting by Haig Simonian in Zurich

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