UBS Says Trading Loss Was $2.3 Billion

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UBS AG (UBSN), Switzerland’s biggest bank, said its loss from unauthorized trading amounted to $2.3 billion, more than initially reported, while Chief Executive Officer Oswald Gruebel dismissed calls to step down.

The loss, first estimated on Sept. 15 at $2 billion, came from trading in Standard & Poor’s 500, DAX and EuroStoxx index futures over the past three months, the Zurich-based bank said in an e-mailed statement yesterday. UBS made the latest disclosures two days after London police charged a 31-year-old trader with fraud and false accounting.

“The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio,” UBS said in the statement. The magnitude of the risk was masked by “fictitious positions,” it said.

http://www.bloomberg.com/news/2011-09-18/ubs-estimates-loss-from-unauthorized-trading-at-2-3-billion.html

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1. Bonuses and Jobs at Risk at UBS as $2.3 Billion Trading Loss Erases Profit

Bonuses at UBS AG (UBSN)’s investment bank may be at risk after the company suffered a $2.3 billion loss from what it described as unauthorized trading.
Switzerland’s largest bank said Sept. 15 that it may be unprofitable in the third quarter as a result of the loss, which exceeds the 1.21 billion Swiss francs ($1.4 billion) in pretax profit from the investment bank in the first half. The bank first estimated the loss at $2 billion, before raising it yesterday.

“A problem of this magnitude means they may be very strongly challenged to have any bonus pool at all,” said Steven Hall, managing director of Steven Hall & Partners, an executive compensation consulting firm based in New York. “It’s pretty clear there are going to be a lot of people who are not going to get bonuses.”

Even before the trading loss, Chief Executive Officer Oswald Gruebel had announced steps to curb costs after a 33 percent slump in profit in the first half of the year. The Zurich-based company said last month it will eliminate about 3,500 jobs, with about 45 percent of the reductions coming from the investment bank. In July, UBS scrapped a target to double pretax profit from last year’s level to 15 billion francs by 2014.


http://www.bloomberg.com/news/2011-09-18/ubs-bonuses-at-risk-as-2-3-billion-trading-loss-erases-profit.html