The big news this week was UBS announcing that a rogue trader had cost the Swiss bank an eye-popping $2 billion, a loss so massive that it might force UBS to report a loss for the entire third quarter.
As reported here, police have arrested 31 year old trader Kweku Adoboli. The big question is how the hell could this happen?
"It's astonishing given the technology, the systems, the emphasis on risk,'' one banking source told Reuters. "UBS has been focusing on it, post-crisis they've put more focus on it than a lot of other banks," the industry source told Reuters. "How does a 31-year-old rack up a $2 billion loss without anybody noticing?"
This case shows we need tougher regulation of banks. Banks have to put a wall around their relatively safe 'retail' operations – such as lending to individuals and small businesses, funds management and private banking. They have to separate that from their much more volatile and risky trading and investment banking operations.
Governments have to step in. This happened at Societe Generale, it happened at Barclays. Now it's happened at UBS and it will happen again unless we bring in laws.
no comment untill now