UBS uncovers more in rogue trader saga
(21 September 2011 – Switzerland) According to insiders, the alleged rogue trader at UBS placed financial bets worth US$10 billion (A$9.64 billion) before his losses were detected by the bank.
It is alleged that 31-year-old Kweku Adobloli who traded on the bank’s Delta One desk made some of the unauthorised trades as long ago as October 2008.
He was arrested last week and charged with fraud and false accounting, with UBS announcing a loss of up to US$2 billion.
The loss has raised the spectre of thousands of jobs cuts or a break-up of UBS.
The size of Mr Adoboli's positions, and the length of time they went undetected by the bank's compliance department, have raised serious questions about UBS's internal controls.
The Financial Services Authority, which launched a joint investigation with the Swiss authorities, has appointed a team of outside forensic accountants to help it piece together what went wrong.
The bank marshalled its own taskforce, called Project Bronze, to unwind Mr Adoboli's positions and ensure there are no other surprises lurking. By noon on Friday, the full US$10 billion portfolio had been wound down.
Mr Adoboli was a director on the Delta One desk, a group that makes money by exploiting tiny price differences on very large trades made on behalf of the bank and its clients.
The key to the strategy is to hedge the banks, and the clients', exposure. It appears that Adoboli's positions were unhedged, potentially leaving them vulnerable to big losses when stockmarkets went into turmoil a few weeks ago.
Meanwhile, UBS chief Oswald Gruebel said he doesn't feel guilty about the US$2 billion (A$1.9 billion) rogue trading affair and won't quit.
'I am responsible for everything that happens in the bank. But if you ask me if I feel guilty, then I would say no,' Gruebel, told Swiss newspaper Sonntag.
When someone is driven by criminal intent, 'you can't do anything,' said Mr Gruebel.
The chief executive also shrugged off socialist calls for his resignation as 'all political.'
'I am not thinking about resigning,' he added, pointing out that this would be a question for the management board.
He was arrested last week and charged with fraud and false accounting, with UBS announcing a loss of up to US$2 billion.
The loss has raised the spectre of thousands of jobs cuts or a break-up of UBS.
The size of Mr Adoboli's positions, and the length of time they went undetected by the bank's compliance department, have raised serious questions about UBS's internal controls.
The Financial Services Authority, which launched a joint investigation with the Swiss authorities, has appointed a team of outside forensic accountants to help it piece together what went wrong.
The bank marshalled its own taskforce, called Project Bronze, to unwind Mr Adoboli's positions and ensure there are no other surprises lurking. By noon on Friday, the full US$10 billion portfolio had been wound down.
Mr Adoboli was a director on the Delta One desk, a group that makes money by exploiting tiny price differences on very large trades made on behalf of the bank and its clients.
The key to the strategy is to hedge the banks, and the clients', exposure. It appears that Adoboli's positions were unhedged, potentially leaving them vulnerable to big losses when stockmarkets went into turmoil a few weeks ago.
Meanwhile, UBS chief Oswald Gruebel said he doesn't feel guilty about the US$2 billion (A$1.9 billion) rogue trading affair and won't quit.
'I am responsible for everything that happens in the bank. But if you ask me if I feel guilty, then I would say no,' Gruebel, told Swiss newspaper Sonntag.
When someone is driven by criminal intent, 'you can't do anything,' said Mr Gruebel.
The chief executive also shrugged off socialist calls for his resignation as 'all political.'
'I am not thinking about resigning,' he added, pointing out that this would be a question for the management board.
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