UBS, the embattled Swiss bank, yesterday accused a group of former and departing executives backed by Goldman Sachs of orchestrating a “smash and grab raid” that devastated the bank’s UK wealth management arm.

The accusations emerged at a preliminary High Court hearing of a bitterly contested legal action that exposed widespread discontent at the bank’s UK wealth management operation.

UBS, which is already reeling from $37 billion (£18.6 billion) in sub-prime related writedowns, is suing Vestra Wealth, a new wealth manager, its founder, David Scott, and four departing UBS managers. It has accused them of conducting an unlawful conspiracy to lure away its staff and clients. Vestra, which is 25 per cent owned by Goldman Sachs, is due to open for business on Monday.

UBS has asked the High Court to impose a temporary injunction banning Vestra from approaching any UBS clients for a year. Vestra, which denies any conspiracy, claims that such an injunction would be unprecedented and would severely limit its ability to attract new business.

Lawyers for UBS told the court that the bank’s UK wealth management arm had been left “utterly paralysed” by the departure of 75 staff to Vestra since May. One team was so ravaged that it was left with only a secretary.

The bank accused David Scott, the former head of UBS’s UK wealth management arm, of leading the conspiracy. On May 19, Mr Scott presented to UBS a letter signed by 52 employees announcing that they were to join Vestra. A further 23 UBS employees followed later.

The bank claims that, at Mr Scott’s direction, senior managers at UBS conducted a widespread secret campaign over several months to resign en masse and then offer to buy the blighted division “on the cheap”.

Andrew Sutcliffe, QC, acting for Vestra, said there were no legal grounds for such a sweeping injunction and that the application belonged in “cloud cuckoo land”. He said that the employees had chosen to leave UBS because they were dissatisfied with the Swiss bank’s handling of the UK wealth management operation since it acquired Laing & Cruikshank in 2004. Mr Sutcliffe said: “It was an extremely unhappy ship and they wanted out.”

Lawyers for Vestra submitted into evidence e-mails and letters from 40 of the departing employees that contained a raft of complaints about UBS. The letters detail allegations of mismanagement, excessive bureaucracy and an “aggressive” sales culture.

The letters also express grave reservations over the negative publicity UBS had received since the credit crunch began. The departing employees said clients had become nervous as to whether they could trust their money with the bank after it had lost so heavily on sub-prime investments.

In his witness statement, Mr Scott also said there was unease among staff over rumours that UBS was attempting to sell the UK wealth management operation to Barclays. There was also concern about “huge financial irregularities and suspected fraud on the Indian desk of UBS in London”.

Mr Scott said: “When these issues were added to the mistrust that was already there, it is perhaps not surprising that they were receptive to my invitation to them to join Vestra.”

Judgment on the injunction application will be given on Monday.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts