Rogue Trader Arrested over $2 Billion Loss at Swiss Bank

September 15, 2011

Rogue Trader Arrested over $2 Billion Loss at Swiss Bank

A trader for the Swiss bank UBS has been arrested by police in the UK on suspicion of fraud in connection with an alleged rogue trading incident worth an estimated $2.3Billion. Police have identified the man as Kweku Adoboli, 31, he was employed at UBS’s equities division in London.

 In a brief statement, UBS said it was still trying to get to the bottom of the matter, which was announced on the third anniversary of the collapse of Lehman Brothers. “UBS has discovered a loss due to unauthorised trading by a trader in its 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. It is possible that this could lead the bank to report a loss for the third quarter of 2011.” It added that “no client positions were affected”.

“From the scale of this case you can be sure that it’s the biggest we’ve ever seen for a Swiss bank,” Swiss financial regulator, Finma, spokesman Tobias Lux told The Associated Press.

Last month UBS announced plans to axe 3,500 jobs to shave over $2 billion off annual costs as it joins rival investment banks in reversing the post-crisis hiring binge and preparing for a tough few years.

The announcement is a major blow for UBS which had started to see client confidence return this year after it had to be rescued by the Swiss state in 2008 following massive losses on toxic assets held by its investment bank.

The Zurich based bank has suffered an almost 10% fall in share price in early trading since revealing the loss.

Publisher: Salient News