Switzerland’s financial regulator has announced it is examining whether UBS should raise capital as part of measures to mend major control failures that led to a $2.3 billion (SFr2.14 billion) trading loss at the bank.
Finma said on Monday that it had found „serious deficiencies in risk management controls“ at UBS’s investment unit and would appoint a third party to ensure that corrective measures were implemented.
UBS said on Monday it would accept the regulator’s decisions, adding that it was relieved the investigation was now over and that the financial watchdog was satisfied with the measures implemented by the bank since the trading loss was revealed.
Finma launched an investigation with Britain’s financial regulator in September last year to review the control mechanisms at the bank that led to Kweku Adoboli, a trader on UBS’s „Delta One“ desk, losing $2.3 billion for the bank. Adoboli was convicted of fraud and jailed for seven years last week.
According to the Swiss regulator, the British Financial Services Authority will impose a £29.7 million (SFr44.2 million) fine on UBS.
„The fraudulent transactions executed by the rogue trader would have been detected sooner if these deficiencies had not existed,“ the regulator wrote in a statement.
Finma said it had decided to take additional steps to beef up controls at the bank, including engaging an audit firm at a later date to review whether the steps taken by UBS were effective.
The regulator is also examining whether UBS must increase its capital backing for its operational risks.
The steps come on top of corrective measures taken as soon as the trading loss was discovered, which included a ban on new acquisitions at UBS’s investment bank and a prior approval from Finma for any new business initiatives.