UBS

[David Johnson]

What is amazing about this is that UBS had all sorts of problems as part of the 2008 financial crash and had to be bailed out by the Swiss government.

As a result UBS were saying they now had the most impressive risk management systems in place of any world bank.

And here we are in the City of London which is supposed to be tightly regulated, with a 31 year old UBS trader blowing $2 billion.

Cheers
D

[Gusset Sniffer]

This guy joined only UBS in 2006 as a trainee investment advisor. How does a man who studied computer science???? rise to such a high position in such a short space of time? Maybe he was good at backing the horses at wincanton? Are these banks appointing these unqualified arseholes to manage our pensions and our children's future?

[Arginald Valleywater]

Probably went to a good school and then Oxbridge. Most City traders don't have degrees in a financial subject, the old school tie is still the main recruiting route.

[David Johnson]

"Are these banks appointing these unqualified arseholes to manage our pensions and our children's future?"

Adoboli was handling UBS's own money not pensions. He worked in Exchange Traded Funds and Delta One trading which involves putting in huge amounts of money to take advantage of minute differences in prices.

However there would be a knock on effect on pensions in the sense that UBS shares went down 10% on the news and any pension fund that had bought shares in UBS would take a hit.

Arginald's "probably went to a good school and then Oxbridge... the old school tie is still the main recruiting route." is completely wrong.

It may have been true over 30 years ago but when Thatcher deregulated the City as part of the Big Bang in the 80's you got all sorts turning up as traders. I have worked in trading floor environments and a number of traders if you met them you would have probably thought the market they worked in was a fruit and veg market rather than a share trading market.

Cheers
D

[David Johnson]

According to the BBC, the only reason UBS found out that he had lost $2 billion was because Adoboli alerted the bank himself.

So if he had decided to keep on gambling to try and recoup his losses, God knows how much he might have ended up blowing.

http://www.bbc.co.uk/news/business-14943084

So much for tight, sophisticated bank risk management techniques!

Cheers
D

[Gusset Sniffer]

I guess they are lucky he has a conscience. A lot of people would have tried to recoup their loses and hope no one found out.

Can a trainee in pensions also rise in 5 years to be playing with million of pounds of pension fund monies? It seems incredible to me that banks are so trusting with these guys. The banks are totally incompetent. I'm sick of hearing winging bankers threatening the country if we regulate them. What arsehole deregulated them in the first place? I thought the yanks introduced something in the 1930,s to stop this happening?

I expect he will still get his bonus this year? !fight!

[David Johnson]

"Can a trainee in pensions also rise in 5 years to be playing with million of pounds of pension fund monies?"

Dunno, to be honest.

"What arsehole deregulated them in the first place?"

Thatcher

"I thought the yanks introduced something in the 1930,s to stop this happening?"

Yeah in 1933 they introduced the Glass Steagall act to keep investment and retail banking completely separate. The recent Vickers report here in the UK is a watered down version of that.

Having said that a separation doesn't necessarily stop the problems. Northern Rock didnt have an investment arm. Lehman Brothers didnt have a retail bank.

Cheers
D

[beutelwolf]

Gusset Sniffer wrote:

> This guy joined only UBS in 2006 as a trainee investment
> advisor. How does a man who studied computer science???? rise
> to such a high position in such a short space of time? Maybe he
> was good at backing the horses at wincanton? Are these banks
> appointing these unqualified arseholes to manage our pensions
> and our children's future?

Well, the banks use computer scientists and mathematicians to build computer-based mathematical models of the stock market. These are essentially used as a prediction tool.

In essence, people trained in finance/economics have neither the mathematical nor programming skills to play that game. Essentially, all these banks have a substantial number of mathematicians and computer scientists on their books for market modelling. I know one particular bank who regularly hired computer scientists with a PhD, on starting salaries of 70 grand plus.

Problem with these prediction tools was that (i) they tend to be too short-term-based, failing to include data from past recessions, and (ii) they are tweakable and can thus be tweaked to make the bosses hear what they want to hear rather than what they should hear.