Last November, after intense market speculation following the departure of four high-profile traders, UBS admitted it had lost pounds 90m on derivatives in the first half of the year.
But losses for the full year are rumoured to be far larger. "The rumours are extremely persistent," said one Zurich-based source, who estimated that the losses could be as high as 2 billion Swiss francs (pounds 820m). Another said: "I have heard figures as high as a billion pounds being tossed around. Although I think that is unlikely, I would not be surprised if the losses ran into hundreds of millions of pounds."
UBS traders are understood to have been caught out by volatility in the emerging markets as well as by changes to UK tax law.
A UBS spokesperson would not comment on trading losses yesterday, but said that UBS would next month publish accounts for the full financial year. It had been rumoured that UBS would combine its accounts with those of SBC, a move which would mask the size of trading losses.
The growing rumours surrounding trading losses will depress further staff morale, dealt yet another blow yesterday by news that UBS managers had lost out to rivals at SBC in the race for top jobs in the new bank.
SBC and UBS have provided staff with details of around 80 senior management posts in the new bank. Just a quarter of the jobs announced yesterday are to go to UBS staff.
"I was staggered," said one UBS insider "It's a very small number."
Morale at UBS was yesterday said to be "incredibly low". By contrast, SBC staff were said to be "reassured that they are in the driving seat".
Details of redundancies - which are expected to total over 3,000 in the City alone - are unlikely to be made public until the merger gains shareholder approval in early February. However, UBS is expected to bear the brunt of the cuts.Reuse content