ZURICH – Swiss bank UBS, the country’s first settlement, announced the discovery of an estimated loss of $ 2 billion as a result of unauthorized brokerage operations conducted in the area of its investment bank on Thursday. A 31 year old man was arrested in London as part of the investigation.
In a brief statement released Thursday morning before the opening of markets, UBS says he “discovered a loss due to unauthorized transactions by a broker in its investment bank. An investigation is ongoing, but current estimates of losses of about two billion dollars. ”
The bank could therefore be required to announce a loss in the third quarter of 2011. No position has been affected customers, the bank said.
Broker UBS in London was arrested Thursday morning around 3:30 by the police and is in custody for suspected fraud and abuse of position, the bank said without providing further details.
In a letter sent to employees, UBS regrets that the incident occurs during a difficult period. “While the news is unfortunate, it does not undermine the foundations of the company,” wrote the management of the bank by inviting his colleagues to “continue to focus on customer service.”
At midday, the title UBS lost more than 7.5 percent of its value to trade at just over 10 Swiss francs ($ 11.55 USD).
Peter Thorne, an analyst at Helvea in London, estimates that the first Swiss bank can support the financial damage in question. But note there is still a blow to the reputation of UBS and its leadership who have already suffered heavy losses during the subprime crisis (high-risk mortgages) in 2008.
The following year, in 2009, UBS was forced to hand over to U.S. authorities the identities of thousands of U.S. clients suspected of tax evasion. The establishment had also paid a fine of 780 million USD.
UBS is not the first financial institution to suffer heavy losses due to uncontrollable trader. In 2008, Société Générale Jérôme Kerviel blamed for having lost just over 4.9 billion euros (6 billion USD). The old trader was sentenced in 2010 to five years in prison, three farm, and to repay the amount.
In 1995, the British dealer Nick Leeson caused the bankruptcy of Barings Bank, the oldest in England. His speculations on the Singapore market had caused a hole of over $ 1.4 billion. Sentenced to six and a half years in prison, Nick Leeson was released for good behavior after serving half his sentence.