Four leave after UBS suffers big trading loss

The giant Union Bank of Switzerland yesterday disclosed that it had been rocked by huge trading losses, possibly running into hundreds of millions of pounds, incurred by three derivatives traders in New York. The traders have left the bank and the affair has also claimed the scalp of their boss, Ramy Goldstein, who worked at the UBS London office.

UBS refused to quantify the size of the loss, declined to make any comment on whether the losses resulted from fraudulent trading and would not discuss the circumstances surrounding the departure of the four employees. Traders at other City houses reckoned the losses suffered by UBS could top pounds 220m.

The New York-based traders were Ronny Apfel, Neall Tahalmein and Allen Burstein. Mr Goldstein was described by one trader last night as "an extremely sharp guy", and was generally considered to be one of the most talented dealers in the City. All four worked for UBS's equity derivatives department.

One trader said: "The view here is that they [the four traders] were sacked because they lost money, not because anything underhand, such as mispricing, was going on." But another said he was "very surprised" at Mr Goldstein's departure and the manner of the departure suggested "something big" had gone on.

In August, UBS said its first-half figures for its equity derivatives department were "unsatisfactory". The bank did not detail results for its equity derivatives division, but total trading income rose by just 1 per cent. One banking observer said last night: "The first-half results, though disappointing, do not seem sufficient to warrant Mr Goldstein's departure."

Mr Goldstein's responsibilities will transfer to Hans Peter Bauer, global head of fixed income, currencies and derivatives. The departure of the derivative traders is thought by some dealers in the City to be part of a big reshuffle. UBS is likely to announce details of a wide-ranging shake-up of management tomorrow.

- Lea Paterson