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An unauthorized trader who allegedly cost Swiss bank UBS 2bn dollars has been detained in London.
London police on Thursday arrested a 31-year-old man on suspicion of fraud in connection with a rogue trading incident that cost Swiss banking group UBS an estimated $2bn.
The Zurich-based bank's shares fell 8 percent upon the news of the incident, which reportedly happened over the past 24 hours.
The BBC reported that the loss could push UBS into the red for the third financial quarter of this year.
The City of London Police spokesman told the media: “We can confirm we arrested a 31-year-old man at 3:30am on suspicion of fraud by abuse of position."
The Guardian reported that watchdog the Financial Services Authority is understood to have been informed.
UBS sent a letter to its staff that read:
The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn.
It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.
While the news is distressing, it will not change the fundamental strength of our firm. We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times.
According to the BBC, UBS would not say which department, or country, the rogue trader operated in – but there is speculation the losses occurred in foreign exchange trades.
ZKB trading analyst Claude Zehnder told the BBC the news would damage confidence in UBS, which had “a problem with risk management.”
In 2008, UBS was rescued by the Swiss state after it suffered major losses on toxic assets held by its investment bank.
UBS was also forced to hand over 300 client names and pay a $780 million fine amid a tax evasion dispute with US authorities.