UBS CFO Says 550 Fired After $2.3 Billion Trading Loss
Tom Naratil, chief financial officer of UBS AG (UBSN), said the Swiss bank fired as many as 550 employees after it suffered a $2.3 billion loss from unauthorized trading last year.
The bank’s share price fell more than 10 percent on Sept. 15, 2011, the day the loss was announced, and employee morale suffered, Naratil testified today at the London trial of Kweku Adoboli, who is accused of causing the loss.
“We did have layoffs that continued in the period following the unauthorized trading incident,” Naratil said via video link from New York, with most of the cuts coming in November and December.
Prosecutors have said Adoboli, who is on trial for fraud and false accounting, created a secret account known as the umbrella while working on the bank’s ETF desk in London where he parked trading profits to cover future losses. Adoboli, 32, has pleaded not guilty and his lawyers have sought to show others knew of the secret fund.
Charles Sherrard, a lawyer for Adoboli, said the bank’s share price rallied after the loss and UBS had already announced a month before the loss that it would cut staff by 3,500.
“To interpret any staff reductions to be caused by Mr. Adoboli would be unfair,” Sherrard said.
While Naratil said he hadn’t stated the cuts were a direct result of Adoboli, he added that “certainly a loss of $2.3 billion would affect staffing levels.”
Ruwan Weerasekera, chief operating officer of securities at UBS’s investment bank, testified last week that Adoboli booked tens of thousands of real and fake trades during the summer of 2011 that exposed UBS AG to losses that could have reached $12 billion within weeks.
The accounting firm KPMG LLP has conducted its own investigation at the request of the U.K. Financial Services Authority into the controls failures at UBS that allowed the trades to happen.
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