Yesterday morning (15 September) a trader working at the Swiss bank USB was arrested for rogue trading that resulted in the loss of £1.3 billion.
Kweku Adoboli, 31, a graduate of Nottingham University, worked as a ‘market maker’ at the Swiss bank, advising their clients about the prices at which they ought to sell and buy their shares.
It is currently uncertain exactly how Mr Adoboli managed to make such huge losses, but USB’s chief executive Oswald Gruebel said he “will spare no effort to establish how it happened”.
The alleged rogue trading will do the Swiss bank no favours as confidence in the banking industry continues to be shaken.
City analysts claim that UBS may suffer “significant reputational damage” since “rich people tend not to want to do business with a bank where there are questions over risk control”.
Already, shares in UBS have fallen by more than 10% (16 September) and the scandal could affect thousands of pensioners who had funds invested in the company.
However, UBS released a statement assuring their clients that they would not be affected.
They said: “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 UBS to report a loss for the third quarter of 2011. No client positions were affected.”
UBS was one of the bank giants that needed a government bailout after the financial crisis and it has just announced that it will be cutting 3,500 jobs in order to save £1.5 billion.
You may also like:
- International: Journalists stand trial in Vatican Holy See scandal
- In the courts: High Court rules benefit cap discriminates against…
- Policing: Watchdog rules that Police Scotland broke law by spying…
- Media law: Tim Yeo loses Sunday Times libel case
- Telecoms law: Cinema company ‘bewilders’ Church of England by banning…