UBS chief executive Oswald Gruebel has resigned over a loss of $US2.3 billion due to rogue-trading.
The move is part of a major shake-up at the Swiss bank which will also see it shrink its investment banking division to reduce its risks.
Mr Gruebel, 67, told a Swiss newspaper last Sunday that he would not resign over the incident.
However, chairman Kaspar Villiger said on Saturday that Mr Gruebel ''feels that it is his duty to assume responsibility for the recent unauthorised trading incident''.
London-based trader Kweku Adoboli, 31, was arrested last week and charged with fraud and false accounting. He was remanded in custody last Friday until 20 October. No application was made for bail.
UBS said Europe, Middle East and Africa chief Sergio P Ermotti, 51, would take over as interim chief executive.
The bank board said it would seek to adopt "mitigation measures" to deal with any failures.
Mr Villiger praised the work of Mr Gruebel who was brought out of retirement in 2009 to reform UBS after it almost collapsed under more than $US50 billion in toxic assets.
UBS made $US6.4 billion in profits in the 12 months to June this year. It lost lost $US35 billion during the 2008 crisis.
UBS has offices in over 50 countries and 65,000 employees. The bank was established 150 years ago.
