Bank of Nova Scotia Chief Executive Officer Richard Waugh said financial institutions should rely less on technology for trading operations after UBS AG had a $2.3 billion loss from unauthorized trading.
“You get too comfortable that that computer image is correct and you start to believe the numbers and the technology, rather than challenging the numbers and technology,” Waugh said today in an interview. “Rely on business judgment, floor supervision and things that have worked for you in the past.”
UBS’s trading problems “couldn’t have come at a worse time” for financial reform, Waugh said today at the SWIFT International Banking Operations Seminar in Toronto. The initial reaction to the unauthorized trading at Zurich-based UBS “will be more regulation,” said Waugh, 63, head of Canada’s third-largest bank by assets.
Banks should be allowed to fail in an orderly and systemic manner, said Waugh, who is a vice chairman of the Institute of International Finance. Waugh plans to attend the International Monetary Fund meetings in Washington this weekend.
Technology should be used as a tool in making business decisions, Waugh said in the interview. He said he embraces technology throughout Toronto-based Scotiabank and wants to expand its use for mobile devices and social media. Waugh said he uses Research In Motion’s PlayBook tablet and Apple Inc.’s iPad and receives about 200 “controlled” e-mail messages each day.
Scotiabank has operations in more than 50 countries, with international banking representing 20 percent to 30 percent of its overall profit. The bank will continue to expand, including in Asia and Latin America, Waugh said.