Swiss banking giant UBS said Thursday that a rogue trader has caused
it an estimated loss of $2 billion, stunning a beleaguered banking
industry that has proven vulnerable to unauthorized trades. Police in London said they arrested 31-year-old Kweku Adoboli in connection with the loss. Switzerland's largest bank warned that it could report a loss for the
entire third quarter as a result, sending its shares plummeting. The bank provided little information on the incident, saying it was
still under investigation and
no client money was involved. The
unauthorized trades could cost UBS almost as much as the two billion
Swiss francs ($2.26 billion) the bank said last month it hoped to save
by cutting 3,500 jobs over two years. The incident comes as UBS is struggling to restore its reputation
after heavy subprime losses during the financial crisis that resulted in
a government bailout, and an embarrassing U.S. tax evasion case that
blew a hole in Switzerland's storied tradition of banking secrecy. Shares in UBS AG plummeting more than 8 per cent in early trading on
the Zurich exchange. By midmorning shares were down 5.8 per cent at
10.30 francs ($11.67).
1 comment:
Apparently this was currency trading. Like most commodity trading it is a zero sum game. Where there is a loser there is also a winner. The other side of the Bank's losses are other banks and/or their clients.(Minus commisions for the retail winners)
The foreign exchange market is a zero sum game in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Post a Comment