UBS said a trader who lost the Swiss bank around $2 billion in unauthorised deals had been arrested in London, with sources close to the situation naming the man as 31-year-old Kweku Adoboli. Adoboli - working as a director of exchange traded funds and Delta 1 trading, according to his profile on LinkedIn - was arrested during the night at UBS's London office on suspicion of fraud, the sources told Reuters on Thursday.
UBS said it discovered the problem on Wednesday afternoon, but gave no details of the trades involved. Police said they had arrested a man at 0230 GMT on Thursday, 2-1/2 hours after being contacted by the bank. "The man was taken to a City of London police station for questioning and he remains in custody while officers are continuing to investigate this matter," City of London police Commander Ian Dyson told reporters.
Adoboli, a University of Nottingham computer science and management graduate, was described by a former landlord as a good tenant of a 1,000 pound ($1,600) per week apartment close to UBS in London's East End, where he lived until recently.
"I can confirm that an employee of the bank was arrested in London in connection with the statement," a UBS spokesman said, after the bank had revealed the loss. UBS shares dropped to their lowest close since March 2009, ending the day down 10.8 percent after it said it might post a third-quarter loss following the trades, a huge blow as it struggles to rebuild its credibility after years of crises. The loss effectively cancels out the 2 billion Swiss franc ($2.3 billion) saving it had hoped to make in a cost-cutting programme announced last month in which it will axe 3,500 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.
It also undermines claims by the Swiss bank and the industry that such events are a thing of the past. 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 a major overhaul of the investment bank.