Rogue trader costs Swiss bank $2bn

Swiss banking group UBS today revealed a rogue trader had cost it an estimated US$2bn (€1.45bn).

The group said the unauthorised trading took place in its investment banking division.

It has not given further details about the activities, which could lead to it reporting a loss for the third quarter of its financial year. UBS said no customer accounts were affected.

The Zurich-based firm said: "UBS has discovered a loss due to unauthorised trading by a trader in its investment bank.

"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn.

"It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected."

Shares in the bank were down by more than 7% today.

The company employs around 65,000 staff worldwide.

However, it said recently it would reduce its headcount by 3,500 as part of a bid to save 2bn Swiss francs (€1.66bn) by the end of 2013.

The cuts came as it said pre-tax profits dropped 23% on the previous quarter to 1.7bn Swiss francs (€1.41bn) in the three months to June 30.

As well as the economic downturn, UBS said regulatory changes such as the Basel rules, which require the bank to hold more capital, were behind the need for the cost reductions.