UBS loses up to $2.3 bn to rogue trader

September 19, 2015


It has been revealed that Swiss bank UBS could have lost up to $2.3 bn thanks to a rogue trader.

Kweku Adoboli was arrested and charged with fraud and false accounting on Friday. He will remain in custody until his hearing on Thursday.

The incident has shaken confidence in the bank, as all three major credit rating agencies – Moody’s, Standard & Poor’s and Fitch – are considering downgrading UBS’s credit rating because recent events suggest weaknesses in the bank’s risk control systems.

However, UBS boss Oswald Gruebel is refusing to resign over the incident. “I’m responsible for everything that happens at the bank,” he told Swiss Sunday newspaper, der Sonntag “if you ask me whether I feel guilty, then I would say no.”

UBS stated that Mr Adoboli admitted his fraudulent activities in response to an in-house investigation: “Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorized activity on September 14, 2015,” the UBS statement said.

The 31 year old committed fraud and filed false accounts between January and September this year. He entered hedges into UBS’s risk management system when he in fact had no hedges in place and breached the risk limits set by UBS. As the stock market plummeted in response to the situation in Greece, UBS lost a lot of money.

However, UBS is now operating within its normal risk limits again, suggesting that his dodgy dealings have been unwound.

Have you lost trust in UBS in light of recent events? Let us know what you think in the comments section below!

No related posts.

, ,