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Kweku Adoboli - Mtuhumiwa wa upotevu wa dola bilioni 2

Discussion in 'International Forum' started by Kweli, Sep 15, 2011.

  1. Kweli

    Kweli JF-Expert Member

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    Sep 15, 2011
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    ZURICH—UBS AG was rocked early Thursday by its disclosure that a rogue trader racked up about $2 billion in losses, an announcement that came hours after British police arrested a man on suspicion of fraud.
    A person familiar with the matter said the man arrested is Kweku Adoboli, a London-based trader on UBS's exchange-traded-fund desk in London. British police confirmed that they arrested a 31-year-old man in London on "suspicion of fraud by abuse of position" at 3:30 a.m. Thursday, but declined to name him.
    According to the U.K.'s Financial Services Authority, Mr. Adoboli has been authorized to work in the securities business since March 2006. According to Mr. Adoboli's LinkedIn profile, he is a director at UBS's ETF desk within a unit called Delta1 Trading. He previously worked as a trade-support analyst at the bank. It is unclear whether Mr. Adoboli is still employed by the bank, according to a person familiar with the situation.
    UBS discovered the huge loss late Wednesday and the bank is still working to ensure that all positions are closed, according to a person familiar with the situation. While UBS said publicly the losses totaled $2 billion, a person familiar with the matter said the total is between $1.5 billion and $2 billion.
    Regardless, the new shock will raise serious questions about the bank's risk-management systems just three years after its investment bank had to write down $50 billion in securities trades.
    The Swiss financial regulator Finma, the Swiss Finance Ministry and the Swiss central bank all declined to comment on the potential loss or its likely causes. UBS said that it is in close contact with Swiss and British regulators.
    A person familiar with the situation said that Mr. Adoboli had pursued the fraudulent trades "with criminal energy."

    The news sent shares in Switzerland's largest bank down nearly 9% in early trading, although they were down 5.8% by mid-morning. The cost of insuring its five-year bonds against default for one year widened by 0.15 percentage point to 2.25 percentage points.


    Analysts at Espirito Santo Investment Bank said the loss looks manageable, but isn't helpful for sentiment and confidence in the bank's risk management. French bank Société Générale SA in January 2008 was rocked by a loss of around €4.9 billion ($6.74 billion) from a series of trades made by one employee


    The loss marks a major set back in the efforts by Chief Executive Oswald Grübel to win back client confidence in a bank that had to be rescued by the Swiss National Bank in 2008. Rebuilding the investment bank has been a top priority for Mr. Grübel since he took the helm at the bank in February 2009, although he has struggled to generate large returns without taking on too much trading risk.


    As a result of the huge securities write-downs, the investment bank lost 34.4 billion francs ($39.28 billion) in 2008 and it shut large parts of its trading division. It also launched a wholesale revision of its risk-management systems. Banks seek to prevent such unauthorized trading through risk-control systems and daily reviews of trading books, but such losses have always dogged the industry.


    Over the last 18 months, Mr. Grübel has tried to push the UBS back into the top ranks of global investment banks, but it has had to contend with tough Swiss banking regulations that are aimed at preventing a repeat of the near-collapse of the bank several years ago. Indeed, regulators have kept a close eye in particular on Mr. Grübel's plan to rebuild the fixed-income, currencies and commodities, or FICC business, which sparked the losses several years ago.


    UBS generally has been cautious about taking on too much risk since its troubles and has said it has moved away from proprietary trading, raising further questions as to how a trader could generate such a large loss. Mr. Grübel is a former trader, while Carsten Kengeter, UBS's investment-banking chief, is a former senior executive at Goldman Sachs's FICC business.


    While UBS has succeeded in part in winning back client confidence at the investment bank, in July, Mr. Grübel scaled back his targets for the unit, after the FICC business posted sluggish performance. He said he would review the future of the trading business in light of tougher new regulations. He was expected to present a new plan for the unit in November. The bank is in the process of laying off about 5% of its staff, with large cuts expected at the investment bank.


    The loss is likely to raise fresh debate in Switzerland as to the role that investment banking plays at UBS and its cross-town rival, Credit Suisse Group. Since the crisis, some Swiss politicians and commentators have urged regulators to push the two big banks to scale down or even spin off their investment-banking units in order to concentrate on their large private-banking businesses, which tend to be far less risky.

    Source: Business News & Financial News - The Wall Street Journal - Wsj.com
     
  2. babu M

    babu M JF-Expert Member

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    Sep 16, 2011
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    [​IMG]
    Ghanaian origin Kweku Adoboli
     
  3. m_kishuri

    m_kishuri JF-Expert Member

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  4. Ndjabu Da Dude

    Ndjabu Da Dude JF-Expert Member

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    UBS, through Kweku Adoboli, gambled and lost in a high stakes, high volume game of abstract financial wheeling and dealing. This young man is probably innocent and played within the rules, routines and regulations, and if anything, it's UBS that should be at fault here.
     
  5. n

    niweze JF-Expert Member

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    Sep 18, 2011
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    [​IMG]



    UBS chairman says committed to investment bank: report

    (Reuters) - UBS is still committed to its investment bank, under fire after one of its London traders was charged over a $2 billion loss, the bank's Chairman Kaspar Villiger told a Swiss newspaper.

    UBS trader Kweku Adoboli was charged with fraud and false accounting dating back to 2008 on Friday, prompting criticism of the bank's control mechanisms and integrated business model.
    The strategy of an integrated investment bank focused on client services is the right one, Villiger told NZZ in the interview published on Saturday. He said UBS needed its investment bank and was not considering a sale.
    UBS spokesman Serge Steiner said UBS had made it clear in the past that it was committed to the integrated business model. "Mr Villiger has only reiterated this point of view," he said.
    In the article, which did not contain any direct quotes, Villiger also said UBS needed to examine if and how the focus on clients and control mechanisms could further be improved.
    The investment bank would have to work with less capital in the future, he said, declining comment on possible personnel changes in the wake of the alleged fraud.
    UBS Honorary Chairman Nikolaus Senn told Swiss television on Friday that he did not believe Chief Executive Oswald Gruebel would be able to resist the pressure to step down given he and the board had the final responsibility for what was happening at the bank.
    "I do not know how often Gruebel flew to London to ask the people in charge how the business was going," Senn said.
    Swiss newspaper Tages-Anzeiger quoted a source close to Gruebel as saying the manager, who has so far been seen as the man who managed the bank's turnaround after the financial crisis, would not give up that easily.
    "Ossi wants to prove he is not the old-fashioned banker unable to learn his lesson that everybody believes him to be," said the source, described as one of Gruebel's colleagues.
    (Reporting by Silke Koltrowitz; Editing by Ruth Pitchford)

    UBS chairman says committed to investment bank: report | Reuters

    Are you kidding me 2billion dollar FOR A DAY? But lets tell the truth here, when one investor takes loss thats means to other investor is celebration time. Lets be real for free market sense!
     
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