UBS lost $300m (£190.5) more than it initially thought after falling victim to what may be the largest rogue trading scandal to hit the City.
The Swiss banking giant had estimated the losses at $2bn when confirming the unauthorised trades last week, but after unwinding the positions of alleged rogue trader Kweku Adoboli, it announced yesterday that the sum was closer to $2.3bn.
UBS also said it had approached Mr Adoboli with questions after reviewing some of his positions. All of the losses related to trades made in the past three months, it said, and the bank had set up a special committee to investigate how it failed to pick up on the unauthorised trading.
Mr Adoboli was arrested last week after it emerged that huge losses had been run up from unauthorised trades. He has been remanded in custody by City of London magistrates' court until a bail hearing on Thursday.
He is charged with offences dating from 2008, but as these did not lose UBS money, the bank's special committee will not investigate them. "The loss resulted from unauthorised trading in various S&P500, DAX and EuroStoxx index futures over the past three months," UBS said yesterday.
The true magnitude of the risk exposure had been distorted because the positions had been hedged with "fictitious trades", obscuring that they violated the bank's risk limits.
The bank has brought together a team dubbed Project Bronze to unwind existing trading positions, preventing it from further losses.
In Switzerland, the management has come under increasing pressure since the incident. Chief Executive Oswald Gruebel, brought in two years ago during the credit crunch, said he would not step down in light of the scandal.
It is understood that significant shareholders, including the Government of Singapore Investment Corporation, were backing the embattled chief executive.Reuse content