By FT reporters

The biggest shareholder in UBS broke its silence about the $2.3bn rogue trading scandal that has engulfed the Swiss group, criticising ?lapses? in the bank?s controls ahead of a pivotal UBS board meeting in Singapore.

Government of Singapore Investment Corporation (GIC), Singapore?s sovereign wealth fund, was already sitting on a substantial loss on its 6.4 per cent stake in UBS before last week?s shock disclosure that a 31-year-old trader on the bank?s ?Delta One? desk in London allegedly lost billions by taking unauthorised futures positions.

Oswald Gr?bel, UBS?s embattled chief executive, met GIC as the bank?s board gathered to review the implications of the scandal, and to consider sweeping changes to its business model in a long-scheduled meeting timed to coincide with the Singapore Grand Prix.

?[We] discussed the alleged fraudulent trading that led to the large financial loss for UBS,? GIC said in a rare statement.

?GIC expressed disappointment and concern at the lapses and urged UBS to take firm action to restore confidence in the bank.?

Mr Gr?bel, the 67-year-old banking veteran brought out of retirement in 2009 to turn UBS round following its near-collapse during the crisis, is under intense pressure, particularly in Switzerland, where politicians and the public have seized upon the losses as proof that the industry requires much tighter controls.

Some UBS bankers said the odds of Mr Gr?bel staying on as chief executive appeared to be shortening as the scandal gathered pace in Switzerland.

Others remained confident that Mr Gr?bel would be able to ride out the storm.

Global banking and securities regulators said the case had prompted them to step up their scrutiny of exchange traded funds, the increasingly popular financial instrument allegedly used by UBS trader Kweku Adoboli to hide lossmaking trades.

Regulators are considering rules to circumscribe the amount and quality of collateral ETF providers need and may also force the fund managers to disclose more about their counterparties and the techniques they use to match the indices the funds are supposed to track.

?We should be more demanding in our regulation. We need transparency on replication methods and on collateral and on the possible existence of active management,? Edouard Vieillefond, managing director of the Autorit? des March?s Financiers, France?s market regulator which has been concerned about ETFs for almost two years, told the Financial Times.

Reporting by Patrick Jenkins, Megan Murphy, Brooke Masters and Kate Burgess

? The Financial Times Limited 2011