UBS Says It Had a $2 Billion Loss From Unauthorized Trading
UBS AG, Switzerland’s biggest bank, may be unprofitable in the third quarter after a $2 billion loss from unauthorized trading at its investment bank.
“UBS has discovered a loss due to unauthorized trading,” the Zurich-based company said in a statement today. “The matter is still being investigated, but UBS’s current estimate of the loss on the trades is in the range of $2 billion.” No client positions were affected, UBS said, declining to comment further on the matter.
The bank tumbled as much as 9.6 percent in Swiss trading following the announcement, which deals a blow to Chief Executive Officer Oswald Gruebel’s attempts to revive the investment bank after the division recorded 57.1 billion Swiss francs ($65 billion) in cumulative pretax losses in three years through 2009. The trading loss may revive calls for Gruebel to shrink or shut the unit.
“How many times do we have to see huge UBS losses?” said Simon Maughan, head of sales and distribution at MF Global Ltd. in London. “It looks unreformed, unwieldy and ultimately unsustainable. This could be a critical tipping point for UBS’s strategy.”