Swiss finished

15 September 2011 By Peter Thal Larsen Follow @Peter_TL

The source of unauthorised trades that triggered a $2 bln loss is unclear. But the bombshell is a blow to the Swiss lender’s claim that its de-risked trading business poses no threat to its private bank. Though UBS can weather the financial hit, a break-up is back on the agenda.

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UBS on Sept. 15 said unauthorised trades by a rogue trader in its investment bank had left the Swiss lender with an estimated $2 billion loss.
City of London police said they had arrested a 31-year old man at 0230 GMT on Sept. 15 in connection with the scandal. According to Swiss newspaper NZZ, the rogue trader worked in UBS’s equities division.
In an email sent to staff Oswald Gruebel, UBS’s chief executive, said it had discovered the unauthorised trading on Sept. 14.
“We understand that you have already had to contend with unfavorable, volatile markets for some time now. While the news is distressing, it will not change the fundamental strength of our firm,” the email said.
The bank said the hit could lead the bank to report a loss for the third quarter of 2011. UBS said no client positions were affected.
UBS shares were down almost 8 percent at 10 Swiss francs at 1030 GMT on Sept. 15.

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