UBS rogue trader arrested in London for $2 bn losses.
Kweku Adoboli is the suspected rogue trader who was arrested in London at early hours today on suspicion of losing $2 billion of UBS, the major investment Swiss bank group.
Ghanaian Kweku Adoboli, 31, was detained on suspicion of committing fraud while working at Swiss bank UBS, after police raided his home at 3.30am.
After the raid UBS shares fell by 8%, as the bank warned that the unauthorized trading could tip the firm into a third-quarter loss.
UBS CEO, Oswald Gruebel sent a memo to UBS staff yesterday that the rogue deals had been discovered within the past 24 hours.
Gruebel told staff:
“We regret to inform you that yesterday we uncovered a case of unauthorised trading by a trader in the Investment Bank. We have reported it to the markets in line with regulatory disclosure obligations.
“The matter is still being investigated, but we currently estimate the loss on the trades to be around 2 billion US dollars.”
Oswald Gruebel vowed to “establish exactly what has happened” and underscored that “no client positions were affected”.
The UBS CEO urged staff to remain focused on their clients as the investigation continues.
“We want to reassure you that we, together with the rest of the management, are working closely with the Investment Bank’s management and risk and controlling to get to the bottom of the matter as quickly as possible, and will spare no effort to establish exactly what has happened. We will keep you updated on the progress of our investigation.”
Trader Kweku Adoboli worked at the UBS’ headquarters in the very heart of London’s finance district.
UBS has around 65,000 employees worldwide, but it said the bank has recently reduced its staff by 3,500 as part of a bid to save $2.3 billion by the end of 2013.
The cuts came as it said pre-tax profits dropped 23% on the previous quarter to $2 billion at the end of June.
As well as the economic downturn, UBS said regulatory changes such as the Basel rules, which require the bank to hold more capital, were behind the need for the cost reductions.
Despite being one of the biggest wealth managers in the world, UBS has a chequered recent history.
In 2008, UBS was rescued by the Swiss state following huge losses on toxic assets held by its investment bank.
The bank then became embroiled in a serious tax evasion dispute with US authorities and was forced to hand over 300 client names and pay a $780 million fine. There was then a second case in which bank agreed to hand over data on 4,450 American clients.
A restructuring then saw UBS launch a multi-million dollars advertising campaign which used the slogan ‘we will not rest’.
UBS Investment Bank’s offices in Stamford, Connecticut boasts the largest trading floor in the world – it is the size of two American football pitches, and sees more than $1 trillion in assets traded every day.
