Of Special Interest
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- Newslink Trends-The Global Strategic Perspective
- Juniper Research says digital wallet users to exceed 4.4 billion by 2025, as mobile drives digital payments’ revolution
- Criminals exploit COVID-19 pandemic with rise in scams targeting victims online
- Equifax says Open Banking proving pivotal to pandemic lending
- Consumer confidence in banks, credit card providers and investments remain stable as demand supercharges digital finance says Toluna research
- Mintos says Europeans are starting to embrace investing
- US banks see IT modernisation as a way to improve customer experience
- Risk mitigation in global trade depends on digitisation-Andrew Raymond, CEO, Bolero International comments
- Juniper Research new study says the volume of B2B payments facilitated by non-banks will exceed 53 billion in 2022, from a COVID-related low of 38 billion in 2020
- CMA issues fifth publication over 3 years of the service quality league table of personal and business current account providers
- Barclays says scammers take advantage of COVID-19, cashing in on nations’ uncertainty
- S&P Global report says financial market infrastructure sector's earnings likely to cool off In second half
- Global banking market capitalisation slumps by over 30% amid pandemic says Buyshares research
- Digital wallet spend in Europe & North America to increase by 40% in 2019, finds study
- Juniper forecasts mobile money transactions will exceed 200 billion by 2024
- Banks can save the world from climate change, says former UN climate chief
- Research by NatWest reveals gender divide over attitudes to saving
- Europe’s big bank problem: too much capital is trapped in the US, says Scope
- Later-Life lending market set to almost double in the next 10 years, finds report
- Barclays/Cebr report challenges nation to think differently about wealth
- Fifth of UK investors looking to debt investment, new research reveals
- Regtech will play a more important role in PSD2, says Mitek
- Banks turn to Fintech partnerships to improve customer experience, finds Fraedom
- New industry code to tackle fraud must deliver, says Which?
- New TTF report highlights loss of trust in financial services
- Arxan highlights financial app vulnerability epidemic
- SAS asks whether banks really need to choose between operations and innovation
- Which? raises alarm as almost 1,700 free ATMs become fee-charging
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
20th September 2011
UBS rogue trading - story so far
Since last Thursday's terse announcement that a rogue trader had cost the bank around $2bn we now know the following facts:
- 1 The trader's name is Kweku Adoboli and he worked on the Delta One trading Desk. He was charged on Friday with fraud and false accounting. He made no plea at the hearing. After UBS control departments questioned Adoboli on 14th September he went home and then emailed a confession to his manager. The bank then informed the regulators, police and the market on the 15th before market open. Adoboli's manger resigned. Most of the losses arose in the last three months though some unhedged transactions date back to 2008. Adoboli is said by the bank to have made up false hedge transactions. It is understood that the Swiss Central bank's recent robust action to devalue the Swiss Frank which led to a jump in Swiss equity prices revealed major losses in the positions Adoboli had taken and led to the discoveries.
- 2 Delta One is a supposed low risk unit trading on exchange-traded funds, equity indexes, equity or dividend swaps. UBS said in its most recent statement "The positions taken were within the normal business flow of a large global equity trading house". The main purpose of Delta One units is to support customer positions and again for the bank to have lost this amount The fact that UBS could lose $2.3bn (the new estimate) on positions of $10bn and no customer positions affected would appear highly unusual, even without the proper hedges in place. A part of the investigations will be likely to ask whether those around the trader did, or should have known, that abnormal and high risk were occurring, irrespective as to whether they were thought hedged or not. UBS also gave assurances in 2007 following proprietary trading losses as to the significant cutting back of such activities.
- 3 Jérôme Kerviel, the rogue trader who cost Société Générale $6.8bn in 2008 also worked in a Delta One unit. Adoboli's rogue trading was supposed to have started in 2008, with the Société Générale incident fresh in everyone's mind which were covered up by fraudulent hedges, never properly investigated. In another parallel with Kerviel he is also understood to have worked in the mid or back-office previously, hence new the controls in place.
- 4 In what would appear to be contradictory statements Oswald Grübel, UBS Chief Executive both said that "the buck stops here" and told Swiss Sunday newspapers that he had no plans to resign. Grübel is a former trader.
- 5 Multiple parallel investigations are now occurring. UBS trading occurs in the UK both through a locally incorporated subsidiary and through a branch of the Swiss Bank so both the UK FSA and the Swiss FINMA are jointly investigating. The two regulators have also appointed Deloitte to carry out a separate investigation into the circumstances. UBS established a special committee "to conduct an independent investigation of the unauthorized trading activities and their relation to the control environment". David Sidwell, the Senior Independent Director, is chairman with Ann Godbehere and Joseph Yam the other members. The police are also conducting their own enquiries.