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How a rogue trader crashed UBS
ZURICH/SINGAPORE Late last Friday afternoon, as Formula One teams readied their cars for a practice session ahead of the Singapore Grand Prix, the entrance hall of the nearby Ritz Carlton buzzed with activity.
One by one, senior executives of Swiss bank UBS entered the lobby, which is designed by Pritzker winning architect Kevin Roche and features a soaring glass ceiling, and made their way to the gold colored lifts that whisk guests up to rooms that overlook the Marina Bay street circuit.
As the bankers sped past works of art by the likes of Henry Moore, David Hockney and Frank Stella, some made their way straight to a lounge UBS had hired to entertain clients during the race weekend. At its entrance stood three Singaporean women wearing red and white polo shirts,fake van cleef alhambra necklace, each holding a sign emblazoned with the UBS logo and the slogan "Welcome, the race starts here".
For UBS chief Oswald Gruebel and perhaps for UBS as it is currently constituted it was more like the end of the road. The bank's board had met in Singapore that afternoon to discuss the loss of $2.3 billion by an alleged rogue trader in its London based investment banking arm. Though the board had not yet gone public with the news, it had decided to accept Gruebel's resignation and appoint an interim replacement.
Gruebel's decision to leave a year or so ahead of schedule was not just a response to the immediate crisis at UBS. It was also an admission that the bank's latest scandal has effectively undone all his efforts over the past two years to lobby against tougher bank regulations.
The alleged rogue trades have killed any remaining ambitions UBS might have to compete with the titans of Wall Street. They also cast a huge shadow across the entire industry and make tough new regulations far more likely,vintage alhambra necklace 10 motifs replica, as the 67 year old hinted in a memo to staff after he quit. This incident has worldwide repercussions, including political ones," he wrote.
In the aftermath of the scandal, the Swiss parliament narrowly rejected a bid to ban investment banking outright. Governments elsewhere are now more likely to push through regulations such as the Volcker rule,van cleef arpel alhambra necklace replica, which is under discussion in the United States and would ban proprietary trading by investment banks, and proposals in Britain that would force banks to "ring fence" their investment banking activities from their consumer banking side.
Global lenders such as UBS and Deutsche Bank have already cut the size of their balance sheets by at least a third since 2007, and are set to further shed risky assets to meet Basel rules on capital which will come into force in 2013. UBS said in August it would axe 3,500 more jobs to cut 2 billion Swiss francs ($2.2 billion) in annual costs, with almost half of those at the investment bank.
Interim CEO Sergio Ermotti, who until now ran UBS's European operations, told journalists on Saturday that his fellow bankers had to accept investment banking "is an industry that is due to shrink, not due to expand. Therefore anybody who wants to have a job and who is really keen to be in this industry will have to accept this new paradigm."
"This could not have happened at a worse time for the industry in general terms," said London based banking headhunter Jonathan Evans, Chairman of Sammons Associates. "Investment banking activities have been under the spotlight too much in recent times for all the wrong reasons and this news will just produce further negativity from the man in the street."
Most of the bank's executives decided to fly home early from the Singapore board meeting. Chief Operating Officer Ulrich Koerner gathered with a few colleagues in a corner of the hotel's Chihuly lounge, looking glum and speaking in hushed tones as they shared a bottle of white wine.
A lawyer, part of the UBS team, paced up and down the marble floored lobby muttering into his BlackBerry, "No . no golden parachute".
As the cars began to wail on the track below, Gruebel appeared in the lounge through a side door. He had changed into casual clothes, and was sporting a black polo shirt and slacks. His hair was slicked back in its trademark style. As he moved across the room toward the grand piano he noticed Koerner and looked visibly relieved. He walked over to his colleague, who was perched on a low slung three seater couch, and stood behind him chuckling.
Speaking in Gruebel's native German, the two men reminisced about what a momentous day it had been. Each tried to reassure the other, until eventually Kroener looked up and said, "It has to be said: You know how to make the best of it, don't you?"
Gruebel chuckled again, smiled and walked back toward the lifts, waving goodbye as he retreated down a corridor toward a green glass sculpture called "sunset."
Asked to comment on his future by Reuters that evening, Gruebel shook his head and walked away. on Wednesday, September 14. The German was in Zurich in UBS's four storey stone headquarters when Carsten Kengeter, who Gruebel had promoted less than a year earlier to head the investment bank, phoned from London.
UBS had only recently started to win back the trust of its wealthy private banking clients after risky bets on subprime mortgages came close to felling it in the financial crisis of 2008. Kengeter knew only that the trades had left it exposed to massive new losses, probably amounting to billions of dollars.
Lawyers and executives were already grilling 31 year old Kweku Adoboli,van cleef mother of pearl clover necklace replica, who had joined the bank five years earlier as a trainee and worked in the equities division. A UBS insider told Reuters that senior managers had been "flabbergasted" after discovering the alleged trades, which had come to light when controllers making routine checks demanded an explanation for positions that were due to settle on September 22. Another insider described the news as like a "meteorite strike".
Exposed, Adoboli had reported himself to his boss John Hughes who had alerted his bosses.
Gruebel and Kengeter, both seasoned former traders, knew they had no time to lose. They ordered a small taskforce dubbed "Project Bronze" by those involved to immediately close Adoboli's open positions. the next morning, as the extent of the problem became clearer, UBS informed City of London police who arrested the trader at around 3.30 at UBS's London headquarters, and then took him to the nearby Bishopsgate police station.
A couple of hours later, executives in Zurich were called in to a pre dawn crisis meeting to decide whether to go public with the news. Project Bronze was scrambling to unwind Adoboli's positions in Asian trading. The bank had to balance its regulatory requirements with concerns that alerting the market could exacerbate losses. With two thirds of Adoboli's open positions closed out overnight, the scale of the losses was clear and executives agreed they would have to say something, especially as it would be almost impossible to keep the arrest secret.
UBS's media department rushed to prepare a statement. Five minutes before European markets opened, the bank dropped its bombshell, first in German and minutes later in English. Chairman Kaspar Villiger said Kengeter and his team had done an "excellent job" to limit losses by moving so fast, contrasting their actions with the hesitation that compounded losses at Societe Generale after rogue trades by Jerome Kerviel three years ago.
ZURICH/SINGAPORE Late last Friday afternoon, as Formula One teams readied their cars for a practice session ahead of the Singapore Grand Prix, the entrance hall of the nearby Ritz Carlton buzzed with activity.
One by one, senior executives of Swiss bank UBS entered the lobby, which is designed by Pritzker winning architect Kevin Roche and features a soaring glass ceiling, and made their way to the gold colored lifts that whisk guests up to rooms that overlook the Marina Bay street circuit.
As the bankers sped past works of art by the likes of Henry Moore, David Hockney and Frank Stella, some made their way straight to a lounge UBS had hired to entertain clients during the race weekend. At its entrance stood three Singaporean women wearing red and white polo shirts,fake van cleef alhambra necklace, each holding a sign emblazoned with the UBS logo and the slogan "Welcome, the race starts here".
For UBS chief Oswald Gruebel and perhaps for UBS as it is currently constituted it was more like the end of the road. The bank's board had met in Singapore that afternoon to discuss the loss of $2.3 billion by an alleged rogue trader in its London based investment banking arm. Though the board had not yet gone public with the news, it had decided to accept Gruebel's resignation and appoint an interim replacement.
Gruebel's decision to leave a year or so ahead of schedule was not just a response to the immediate crisis at UBS. It was also an admission that the bank's latest scandal has effectively undone all his efforts over the past two years to lobby against tougher bank regulations.
The alleged rogue trades have killed any remaining ambitions UBS might have to compete with the titans of Wall Street. They also cast a huge shadow across the entire industry and make tough new regulations far more likely,vintage alhambra necklace 10 motifs replica, as the 67 year old hinted in a memo to staff after he quit. This incident has worldwide repercussions, including political ones," he wrote.
In the aftermath of the scandal, the Swiss parliament narrowly rejected a bid to ban investment banking outright. Governments elsewhere are now more likely to push through regulations such as the Volcker rule,van cleef arpel alhambra necklace replica, which is under discussion in the United States and would ban proprietary trading by investment banks, and proposals in Britain that would force banks to "ring fence" their investment banking activities from their consumer banking side.
Global lenders such as UBS and Deutsche Bank have already cut the size of their balance sheets by at least a third since 2007, and are set to further shed risky assets to meet Basel rules on capital which will come into force in 2013. UBS said in August it would axe 3,500 more jobs to cut 2 billion Swiss francs ($2.2 billion) in annual costs, with almost half of those at the investment bank.
Interim CEO Sergio Ermotti, who until now ran UBS's European operations, told journalists on Saturday that his fellow bankers had to accept investment banking "is an industry that is due to shrink, not due to expand. Therefore anybody who wants to have a job and who is really keen to be in this industry will have to accept this new paradigm."
"This could not have happened at a worse time for the industry in general terms," said London based banking headhunter Jonathan Evans, Chairman of Sammons Associates. "Investment banking activities have been under the spotlight too much in recent times for all the wrong reasons and this news will just produce further negativity from the man in the street."
Most of the bank's executives decided to fly home early from the Singapore board meeting. Chief Operating Officer Ulrich Koerner gathered with a few colleagues in a corner of the hotel's Chihuly lounge, looking glum and speaking in hushed tones as they shared a bottle of white wine.
A lawyer, part of the UBS team, paced up and down the marble floored lobby muttering into his BlackBerry, "No . no golden parachute".
As the cars began to wail on the track below, Gruebel appeared in the lounge through a side door. He had changed into casual clothes, and was sporting a black polo shirt and slacks. His hair was slicked back in its trademark style. As he moved across the room toward the grand piano he noticed Koerner and looked visibly relieved. He walked over to his colleague, who was perched on a low slung three seater couch, and stood behind him chuckling.
Speaking in Gruebel's native German, the two men reminisced about what a momentous day it had been. Each tried to reassure the other, until eventually Kroener looked up and said, "It has to be said: You know how to make the best of it, don't you?"
Gruebel chuckled again, smiled and walked back toward the lifts, waving goodbye as he retreated down a corridor toward a green glass sculpture called "sunset."
Asked to comment on his future by Reuters that evening, Gruebel shook his head and walked away. on Wednesday, September 14. The German was in Zurich in UBS's four storey stone headquarters when Carsten Kengeter, who Gruebel had promoted less than a year earlier to head the investment bank, phoned from London.
UBS had only recently started to win back the trust of its wealthy private banking clients after risky bets on subprime mortgages came close to felling it in the financial crisis of 2008. Kengeter knew only that the trades had left it exposed to massive new losses, probably amounting to billions of dollars.
Lawyers and executives were already grilling 31 year old Kweku Adoboli,van cleef mother of pearl clover necklace replica, who had joined the bank five years earlier as a trainee and worked in the equities division. A UBS insider told Reuters that senior managers had been "flabbergasted" after discovering the alleged trades, which had come to light when controllers making routine checks demanded an explanation for positions that were due to settle on September 22. Another insider described the news as like a "meteorite strike".
Exposed, Adoboli had reported himself to his boss John Hughes who had alerted his bosses.
Gruebel and Kengeter, both seasoned former traders, knew they had no time to lose. They ordered a small taskforce dubbed "Project Bronze" by those involved to immediately close Adoboli's open positions. the next morning, as the extent of the problem became clearer, UBS informed City of London police who arrested the trader at around 3.30 at UBS's London headquarters, and then took him to the nearby Bishopsgate police station.
A couple of hours later, executives in Zurich were called in to a pre dawn crisis meeting to decide whether to go public with the news. Project Bronze was scrambling to unwind Adoboli's positions in Asian trading. The bank had to balance its regulatory requirements with concerns that alerting the market could exacerbate losses. With two thirds of Adoboli's open positions closed out overnight, the scale of the losses was clear and executives agreed they would have to say something, especially as it would be almost impossible to keep the arrest secret.
UBS's media department rushed to prepare a statement. Five minutes before European markets opened, the bank dropped its bombshell, first in German and minutes later in English. Chairman Kaspar Villiger said Kengeter and his team had done an "excellent job" to limit losses by moving so fast, contrasting their actions with the hesitation that compounded losses at Societe Generale after rogue trades by Jerome Kerviel three years ago.
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