UBS: The Rogue Trader Just Added to the Western Unemployment Problem
If UBS (NYSE:UBS) does not make a profit this year, bankers may not see any bonuses because of a surprise $2 billion loss for the Swiss bank. The loss was the result of a rogue trader who apparently didn’t have daily oversight. The lack of basic management skills at UBS caused the bank to have a $630 million deficit for Q3.
The huge loss, which was announced on Thursday, was the final straw for the UBS’ struggling investment bank. It has had a hard time, as well as other banks (NYSE:KBE) have, due to falling markets, regulation changes, and the rising Swiss franc (NYSE:FXF).
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“Ratings agencies Standard & Poor’s (NYSE:MHP) and Moody’s (NYSE:MCO) put the bank’s credit rating on negative watch while it had put UBS’s viability rating on negative watch. The incendent strengthens the arguments for UBS to down-scale its investment banking unit, according to Fitch. Also, ‘the loss is a setback to UBS’ efforts to rebuild its reputation and demonstrate strengthened risk management following its weak performance in 2007-2009’ according to S&P,” reports Reuters.
Ironically, the $2 billion loss due to the rogue dealing has made it so UBS (NYSE:UBS) will not save any money from the their recent plan to cut 3,500 jobs. As if layoffs for cost savings weren’t already bad enough.
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UBS’s stock (NYSE:UBS) is up 2.89% to $11.74 on the news. Shares are down 28.78% year to date. The stock has traded in a 52-week range between $11.21 and $20.08.