UBS revises rogue trading loss upwards to $2.3bn

Swiss banking giant UBS on Sunday revised losses due to rogue trading upwards to $2.3 billion but the bank's chief executive insisted he would not resign, saying he bore no guilt. In its first statement after Thursday morning's announcement on the rogue trades, the bank revealed that the losses previously estimated at $2 billion arose from unauthorised speculative trading in S&P500, DAX and EuroStoxx index futures. The true magnitude of the risk exposure had been hidden through "fictitious" positions allegedly executed by the trader, the bank said. "These fictitious trades concealed the fact that the index futures trades violated UBS's risk limits," it said, adding that the trades -- carried out over the last three months -- have now been unwound and the situation brought back to normal. "We have now covered the risk resulting from the unauthorized trading, and the equities business is again operating normally within its previously defined risk limits," it said, underscoring that no client positions were affected. Despite the colossal losses, the bank's chief executive Oswald Gruebel said that he would not step down."I am responsible for everything that happens in the bank. But if you ask me if I feel guilty, then I would say no," Oswald Gruebel, chief executive of the bank, told Swiss newspaper Sonntag in an interview published Sunday. When someone is driven by criminal intent, "you can't do anything," said Gruebel. The chief executive also shrugged off Socialist calls for his resignation as "all political." "I am not thinking about resigning," he added, pointing out that this would be a question for the management board. Pressure has been mounting on Gruebel since the unauthorised trades were uncovered. On Sunday, Swiss tabloid Blick ran a headline saying: "Herr Gruebel, time to say goodbye." The bank's honorary chairman Nikolaus Senn told Swiss German television late Friday that he doubted that Gruebel could stay after the debacle. Senn said that adequate checks were not implemented and criticised Gruebel for his over-reliance on the controls system to uncover problems. "I don't know how many times Oswald Gruebel flew to London in order to understand from the managers on site what was going on," Senn said.For now, the bank has launched an internal probe on the case as well as on the adequacy of its control system.Ex-Morgan Stanley executive David Sidwell will chair the panel probing the case. He is joined by former Swiss Re chief financial officer Ann Godbehere and Joseph Yam, ex-central banker of Hong Kong. All three are members of the bank's board of directors.Equities trader, 31-year-old Kweku Adoboli, was arrested in London in the early hours of September 15 on suspicion of the fraud. The bank said that the trader, who was working in the global synthetic equity business in London, had revealed the rogue trades on September 14, after inquiries from the bank's control functions.The case has sparked debate in Switzerland about the future of investment banking, which was also at the root of UBS' colossal losses in the US subprime crisis. Former justice minister Christoph Blocher even suggested banning the business completely. "We must seriously look at whether one should ban investment banking in commercial banks," the far-right politician told newspaper SonntagsZeitung in remarks published Sunday.