A UBS rogue trader who gambled away £1.4bn in the City's biggest ever fraud "believed he had the magic touch" but caused "chaos and disaster" to all around him, a court heard today.
Kweku Adoboli, 32, wiped almost £2.8bn off his bank's share price - around 10pc - with his fraud which he carried out to boost his ego and his bonuses, the jury was told.
He broke the rules limiting bankers and lied to his superiors to cover up his illegal actions, Southwark Crown Court was told as the trial against him opened this morning.
The gamble could have cost the bank £7.4bn.
Adoboli gambled such vast sums "he could easily have approached and even exceed the limits" of the resources of one of the largest investment banks in the world, the court was told.
Sasha Wass QC, prosecuting, said: "The defendant, Kweku Adoboli, was an investment banker.
"He is on trial because he lost his bank $2.3bn.
He fraudulently gambled it away.
"He also wiped around 10pc or about $4.5bn off his bank's share price.
"He did this by exceeding his trading limits, inventing fictitious deals to conceal this and then lying to his bosses.
"Mr Adoboli's motive was to increase his bonus, his status, his job prospects and his ego.
"Like most gamblers, he believed he had the magic touch. Like most gamblers, when he lost, he caused chaos and disaster to himself and all of those around him."
He was a "trusted" and "admired" member of the team and "rewarded with large bonuses" for making what the bosses thought were huge profits for the bank.
Prosecutor Sasha Wass QC said: "But Mr Adoboli's greed got the better of him and he took advantage of the bank's trust to cheat the system for his own gain."
Adoboli denies two counts of fraud and two of false accounting alleging that he falsified records of transactions and exposed his bosses, whose interest he was employed to protect, to losses.
He earnt £110,000 a year in basic salary with a bonus of £250,000 in 2010, the court heard.
The charges span from a three year period from October 2008 to September last year (2011) while he was working at UBS's global synthetic equities division, buying and selling exchange traded funds, which track different types of stocks, bonds or commodities such as metals.
The "colossal" loss was the result of pure "naked gambling", the court heard.
It would have been enough to pay for 70,000 new nurses, two Wembley stadiums, or six new hospitals.
The gambling had the potential to threaten the very existence of the Swiss banking giant, the court heard.
His "fraud unravelled" in September last year when his bosses realised the deals "which he hoped would lead to huge profits for the bank and from which he might expect to receive an enormous bonus for himself" had caused massive loss, prosecutor Sasha Wass told the court.
She said: "To put the huge trading loss of $2.3billion in some sort of perspective, this sum of money would be enough to pay a year's salary for nearly 70,000 new nurses or two Wembleys or perhaps even six new hospitals.
"This colossal loss arose purely as a result of Mr Adoboli's fraudulent deal making, which amounted to naked gambling."
He lost the cash by manuipulating the accounting system, "side stepping the controls" and "breaking the rules" set by his bosses at UBS which prohibited high risk and unauthorised investments, the jury at Southwark Crown Court were told.
In reality the investment banker was exceeding his trading limits, pretending he had insured or hedged his investments, inventing clients, and using his "extensive knowledge" of the banks systems to "circumvent their controls".
Ms Wass said: "He was lying to the bank and deceiving his senior managers, his risk control department, and the accounts department.
"He was risking the very existence of the bank by gambling its resources ultimately for his own benefit.
"In effect, Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler.
"He had become what is sometimes referred to as a rogue trader. As we will see in due course, Mr Adoboli's activities were far more deliberate than that of a rogue trader."
Ms Wass continued: "He would not simply make a few wild bets.
"He faked bookings, he created false accounts and conducted himself as a master fraudster, deliberately and systematically deceiving and defrauding the bank which was employing him.
"As Mr Adoboli was later to admit he had been cooking the books and deceiving the bank since 2008 - two and a half years before he was caught."
The Ghanaian, who holds a passport for his home nation where he was born but has indefinite leave to remain in the UK, is son of a former UN worker and was privately educated in the UK.
The former head boy went on to study Chemical Engineering at Nottingham University in 2000, and in 2003 he graduated in e-commerce and digital business studies, the court heard.
In 2002, Adoboli completed an internship at UBS, and he started working in the operations department of the investment banking division in 2003, the court heard.
In 2005 he then moved to the bank's equities divisions and was promoted from analyst to trader and took with him "an insight into the system's weaknesses", the jury were told.
He then joined the Exchange Traded Fund desk and by 2010 had been promoted to director as his career progressed "at great speed".
By moving to the front office he took the "first step to becoming one of an elite group of traders" who earn million dollar bonuses.
The accounting controls at the bank are a "double entry book keeping system" which means all entries have to be made in pairs to "balance the books".
With his insider knowledge of the back office fooling the double entry system "lies at the root" of his colossal fraud, Ms Wass said.
He covered up his gambles by making false balancing entries in the accounts for hundreds or thousands of his entries - sometimes there was no cash coming in, no customer and no hedged trades made because he had faked the entries and his bosses were satisfied that the books balanced.
Because of his back office knowledge "he would have known what event triggered the alarms and how to avoid this happening", Ms Wass said.
In 2005, when he first moved to the first office, Adoboli was on £33,000 with a bonus of £7.500 which rose slightly in 2006 to a £35,000 salary with a £10,000 bonus.
In 2007 his pay rose to £40,000 with a £55,000 bonus and in 2008 his salary rose to £50,000 but his bonus dropped to £15,000.
By 2009, when he had begun his fraud, his salary was doubled £100,000 and bonus was more than six times that of the previous year at £95,000 and in 2010 he took home £110,000 in salary and a staggering £250,000 in bonuses on the back of his lies, the court heard.
Ms Wass said: "Mr Adoboli's income had risen dramatically during 2009 and 2010, not because he was a genuine top trader, but because as he later admitted, it was during this period that he began to fraudulently gamble the bank's money."
There are three rules to trading - trading limits, which for him was $100 million a day unless authorised by his manager, hedging, a form of insurance where a balance is made between investments to limit the risk of loss, and finally recording trades accurately and quickly.
Adoboli did not hedge his bets so he could make the biggest profit without the "insurance" of hedging but in reality he made a loss, the court heard.
"Three clear sensible rules, Mr Adoboli broke all three," Ms Wass said.
She said: "When you put your life savings in a pension fund you do not expect an investment banker to gamble it on the toss of a coin.
"You expect him to limit the downside and maximise the growth of the investment for your old age."
But rather than look after the case Adoboli fell into the "martingale" gambling system which involved doubling his bets after each loss and which quickly moved into the billions when the market didn't move in the direction he had predicted.
Ms Wass said: "At one stage Mr Adoboli was in danger of losig the bank nearly $12 billion of unhedged investments...
"He had been sucked into a gambler's mindset and he started throwing good money after bad as he waited for the markets to change in his direction, in other words for heads to come up."
But rather than running a simple martingale system and waiting for heads to come up on the toss of a coin half way through his losses "he stopped betting on heads and started betting on tails" - just as head came up, the court heard.
"There is no doubt that he had been thoroughly trained and was fully aware of his duties and responsibilities" but still chose to gamble the money, Ms Wass added.
Adoboli, of Whitechapel, east London started work for the Swiss banking giant in the back office in 2002 and worked his way up to trader in October 2008.
UBS invests and manages money, including pension funds, as well as advising other banks and corporations.
Smartly dressed in a dark grey suit with a purple tie Adoboli sat with his legal team in the benches usually reserved for lawyers, while journalists filled the dock as an overspill area as there was international interest in the trial.
The trial continues.