UBS in trouble again after rogue trader held for $2 bn fraud

Staggered by a $2-billion loss caused by 'rogue trader' Kweku M Adoboli, Swiss bank UBS is now in danger of losing clients to its rivals as they pull their funds out of UBS, analysts say.

Adoboli, 31, was charged by the London police with fraud on Friday after the Swiss bank said it lost $2 billion because of unauthorised trades.

Adoboli was charged with false accounting from October 2008 to the end of 2009, including falsifying records of exchange-traded fund transactions with a view to personal gain. He was also charged with false accounting for reportedly falsifying records from January to 14 September this year.

A third charge relates to abuse of position, stating that as a senior trader of global synthetic equities during the above period, Adoboli acted against the interests of UBS and ''dishonestly abused that position'' to make a personal gain.

The dates in the charges raise renewed questions about UBS's risk management processes, which the bank's chief executive, Oswald J Grübel, had pledged he would improve when he took over in 2009.

The Financial Services Authority, Britain's stock market watchdog, and Swiss market regulators said on Friday that they would begin an independent investigation into the bank's ''control failures and the strength of the bank's existing controls to prevent fraudulent trading in investment banking.