A UBS investment bank trader has lost $2bn in
unauthorised transactions dealing a major blow to the Swiss banking
giant’s efforts to put its troubles of the past three years behind
it.

The bank warned the substantial losses could
affect the bank’s third quarter results that are due to be
published on 25 October.

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UBS reported group pre-tax profit of CHF 1.7bn
($2.12bn) in June 2011, meaning a $2bn hit from the bad trades
could push the Swiss bank into reporting a loss in Q3 worth several
hundred million Swiss francs.

PBI understands no client positions
in the private banking division were affected, although the matter
is still being investigated, UBS said.

 

Difficult past not behind
UBS

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UBS announced in June it would cut 3,500 jobs
in a desperate attempt to save CHF450m in the second half of
2011.

In the past three years, UBS has seen the
withdrawal of CHF195.1bn in UHNW clients’ funds driven by $50bn of
write downs in mortgage-linked investment products.