A rogue trader is suspected of causing an estimated $2 billion loss for Swiss banking giant UBS, which has previously proven vulnerable to unauthorized trades, Forbes is reporting. London police have said they have arrested Kweku Adoboli, a 31-year-old UBS trader, but the financial company has yet to confirm his identity.
UBS has provided little information overall, saying the incident is still under investigation. But the unauthorized transactions can cost the bank almost as much as the money it hopes to save by cutting 3,500 jobs over the next two years.
The incident also comes as UBS is struggling to restore its reputation. The company suffered heavy subprime losses during the financial crisis that lead to a government bailout and a U.S. tax evasion case.
Adoboli worked on an equities desk at UBS called Delta One. He traded in Exchange Traded Funds (ETFs), which track an underlying asset. ETFs have grown over the past few years and are believed to be valued over a trillion dollars.
As a result of Adoboli’s arrest, the Swiss parliament began debating on the country’s banking industry. Lawmakers are being asked to consider proposals to ensure that Switzerland’s two biggest banks, UBS and Credit Suisse Group, will be brought under tighter control, as they’re considered too big to fail.
Written by: Karen Benardello
