UBS Losses Bigger Than First Thought

Swtizerland’s UBS bank has announced that the losses incurred by its rogue trader amount to $2.3 billion (SFr2.01 billion), not two billion as previously thought.

In a statement issued on Sunday the bank said it had now covered the risk resulting from the unauthorised trading, and “the equities business is again operating normally within its previously defined risk limits.”

“As previously stated, no client positions were affected.”

It said the loss had resulted from “unauthorized speculative trading” over the last three months. Although the positions taken were “within the normal business flow of a large global equity trading house as part of a properly hedged portfolio”, the trader had apparently hidden the true size of the risk by creating fictitious future orders.

It said the trader had revealed what he had been doing on Wednesday when questioned by the bank’s “control functions” which were reviewing his trades.

Earlier media reports had suggested that the losses had only emerged when the trader himself had decided to reveal them.

The bank’s chief executive, Oswald Gruebel, has said he has no intention of resigning over the loss which was publicly revealed on Thursday.

He told the Swiss German-language newspaper Sonntag that calls for his resignation were “purely political”.

“If you ask me whether I feel guilty, the answer is ‘no’,” he told the Sunday paper, while saying that he was responsible for everything that happens in the bank.

“When someone decides to act with criminal energy, you can’t do anything about it. This will always exist in our job,” he added.

The trader who allegedly made the unauthorised deals appeared in court in London on Friday, and was charged with fraud and false accounting.