UK financial watchdog slaps £30m fine on UBS - Independent Online

Reuters

Former UBS trader Kweku Adoboli arrives at Southwark Crown Court in London in a September 10, 2012 file photo. Britain's financial regulator fined Swiss investment bank UBS 29.7 million pounds ($47.6 million) for system and control failings that allowed Kweku Adoboli to cause over $2 billion losses through unauthorised trading in London. REUTERS/Neil Hall/files (BRITAIN - Tags: BUSINESS CRIME LAW POLITICS)

Caroline Copley Zurich

UBS has been fined £30 million (R426m) by Britain's financial watchdog and put under extra scrutiny by its Swiss counterpart over failings that allowed a rogue trader to lose $2.3 billion (R20.3bn).

Announcing the fine yesterday, Tracey McDermott, the director of enforcement at Britain's Financial Services Authority (FSA), said the Swiss bank's risk control systems were "seriously defective".

Kweku Adoboli, a trader on UBS's exchange traded funds desk in London, was jailed for seven years last week after admitting trading far in excess of authorised limits.

"Failures of this type in firms of the size and standing of UBS not only damage the firms concerned but also wider confidence in the integrity of the markets and the financial system," McDermott said.

In a separate announcement, the Swiss financial regulator Finma said it was examining whether UBS should increase capital to back its operational risks.

A Finma spokesman declined to elaborate yesterday.

UBS said it had made progress over the past year "reinforcing our position as one of the most financially sound global banks".

The Swiss regulator said that it was appointing an independent investigator to see whether the action UBS was taking to put things right after last year's trading scandal was proving effective.

UBS said it accepted the regulators' findings and the penalties, adding it was pleased that the regulators had acknowledged the steps the bank had taken, including disciplinary action against staff.

UBS chief executive Sergio Ermotti, installed after Oswald Gruebel stepped down over the scandal, announced a major restructuring last month to wind down large, risky parts of its investment banking division.

Finma said the bank's control functions had been based too much on trust and that it had sent misleading signals by awarding bonuses and pay rises to Adoboli, even though he had breached the rules.

UBS said last month that its total capital requirements under the Basel 3 global rules were expected to decline to 17.5 percent from 19 percent as it cut risk-weighted assets and its balance sheet over the coming years. The shares were down 1 percent in early Zurich trade. – Reuters