Bank takes bigger hit in rogue trading scandal
SWISS bank UBS lost $300m more than it initially thought after falling victim to what may be the largest rogue trading scandal ever to hit Europe.
The banking giant had estimated the losses at $2bn (€1.5bn) when confirming the unauthorised trades last week, but after unwinding the positions of alleged rogue trader Kweku Adoboli, it announced yesterday that the sum was closer to $2.3bn (€1.7bn).
UBS also said it had approached Mr Adoboli with questions after reviewing some of his positions. All of the losses relate to trades made in the past three months, it said, and the bank has set up a special committee to investigate how it failed to pick up on the unauthorised trading.
Mr Adoboli was arrested last week after it emerged that huge losses had been run up from a series of unauthorised trades. He has been remanded in custody until a hearing later this month.
The trader wept in the dock of City of London magistrates court on Friday as he was charged over offences dating back to 2008. However, as these did not lose UBS any money, the bank's special committee will not investigate them.
UBS yesterday also lifted the lid on the nature of the trades carried out.
"The loss resulted from unauthorised trading in various S&P500, DAX and EuroStoxx index futures over the past three months," the statement said.
It added that the true magnitude of the risk exposure had been distorted because the positions had been hedged with "fictitious trades", obscuring the fact they violated risk limits.
It emerged that bets totalling $10bn had been made at UBS last week. Mr Adoboli's boss, John Hughes, is understood to have left the bank after the news emerged on Thursday morning. UBS brought together a team to unwind existing trading positions, preventing it from further losses. In Switzerland, the management team has come under increasing pressure since the incident. (©Independent News Service)