Thursday, 15 September 2011
Swiss bank UBS said a rogue trader had lost it $2 billion in unauthorized dealing
British Police in London arrested a man in connection with the case.Police said they had arrested a 31-year-old man on suspicion of fraud. Swiss newspaper NZZ cited UBS as saying the trader worked in its London equities division.
"I can confirm that an employee of the bank was arrested in London in connection with the statement," a spokesman for UBS told Reuters on Thursday.
UBS warned it might post a loss in the third quarter after the rogue trades, a huge blow as the bank struggles to rebuild its credibility after years of crises.
The loss threatens the future of UBS's investment bank, which is being reviewed by Chief Executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich U.S. clients dodge taxes.
UBS, which said no client positions were affected by the unauthorized trades, holds an investor day on November 17, when it is expected to announce major restructuring of the investment bank.
"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a brief statement.
UBS employed almost 18,000 people in its investment bank at the end of June, most of them based outside Switzerland, particularly in London and the United States.
UBS shares were down 7.8 percent at 10.08 Swiss francs at 1034 GMT (6:34 a.m. ET), while the European banking sector was up 1.8 percent.
"(This) is a staggering demonstration that all the clever systems that the banks now have, especially after the financial crisis, still cannot stop a determined individual getting round them if they want to," said Chris Roebuck, Visiting Professor at Cass Business School in London.
"It will yet again confirm to the majority of shareholders who are Swiss that investment banking is not 'proper' banking, as private banking is."
"I can confirm that an employee of the bank was arrested in London in connection with the statement," a spokesman for UBS told Reuters on Thursday.
UBS warned it might post a loss in the third quarter after the rogue trades, a huge blow as the bank struggles to rebuild its credibility after years of crises.
The loss threatens the future of UBS's investment bank, which is being reviewed by Chief Executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich U.S. clients dodge taxes.
UBS, which said no client positions were affected by the unauthorized trades, holds an investor day on November 17, when it is expected to announce major restructuring of the investment bank.
"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2 billion," the bank said in a brief statement.
UBS employed almost 18,000 people in its investment bank at the end of June, most of them based outside Switzerland, particularly in London and the United States.
"(This) is a staggering demonstration that all the clever systems that the banks now have, especially after the financial crisis, still cannot stop a determined individual getting round them if they want to," said Chris Roebuck, Visiting Professor at Cass Business School in London.
"It will yet again confirm to the majority of shareholders who are Swiss that investment banking is not 'proper' banking, as private banking is."
