Adoboli – a director of exchange traded funds and “Delta 1” working in the bank’s London office, according to his profile on networking site LinkedIn – has been arrested arrested on suspicion of fraud.
“I can confirm that an employee of the bank was arrested in London in connection with the statement,” a UBS spokesman said.
UBS said it might post a third-quarter loss after the rogue trades, a huge blow as it struggles to rebuild its credibility after years of crises.
The loss effectively cancels out the US$2 billion that the bank had hoped to save in a cost-cutting programme announced last month in which it will axe 3500 jobs.
It also threatens the future of UBS’s investment bank, which is being reviewed by chief executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich US clients dodge taxes.
UBS, which said no client positions were affected, is scheduled to hold an investor day on November 17 at which it was expected to announce major restructuring of the investment bank.
“The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of US$2 billion,” the bank said in a statement.
UBS employed almost 18,000 people in its investment bank at the end of June, most of them outside Switzerland, particularly in London and the United States.
Hopefully Adoboli got $2 billion worth of fun out of his efforts but it doesn’t seem likely. At least Nick Leeson had a certain extravagant lifestyle to go with losing millions.
UBS must be feeling a bit sick right now, but at least they get to live to fight another day and haven’t been sunk by it. One guy can illegally lose $2 billion? That is one crap internal audit system that UBS has.