Bad deal? Media point finger after UBS trader verdict


By
Scott Capper


Adoboli left Southwark court in a prison truck after the sentence was announced

Adoboli left Southwark court in a prison truck after the sentence was announced

(Keystone)

Swiss newspapers had surprisingly little to say on Wednesday about the sentencing of former UBS trader Kweku Adoboli in London, despite the impact the court decision had on the Swiss bank’s investment arm and reputation.

The press in Zurich, Switzerland’s main financial centre, were the only ones reflecting on the effects of the case. The rest of the country’s media stuck with the facts, a stance that reflects UBS’s own discretion during the trial.

The tabloid Blick focused on one figure presented by the prosecution during the trial: the $2.3 billion (SFr2.2 billion) loss incurred by UBS through Adoboli’s illegal trading. This, it said, would be equivalent to the salaries of 70,000 nursing staff in Britain for two years.

Pointing out that the seven-year sentence was relatively lenient, Blick added that the trader would not have to reimburse a single penny to anyone.

But the paper also said that if UBS had seemingly dodged a bullet with the verdict – being cleared of any responsibility – there was still the suspicion that the bank looked the other way as long as its rogue trader raked in profits.

More astonishingly, according to Blick, was that the bank had issued ten pages of guidelines to avoid a repeat of the Adoboli case, but only after billions had gone missing in the first place.

Macho culture

The Tages-Anzeiger focused on how banks in general could get into such a mess. It pointed the finger at banking’s macho culture, where bright young graduates were trained to become money-making machines.

Adoboli was one of them – highly intelligent, educated, hardworking and extremely ambitious – the “very model of a young financial warrior,” the paper wrote. It added, however, that the training the banks imposed on their employees regularly had unforeseen consequences, with so-called rogue traders appearing in the ranks.

These traders speculate illegally with billions, causing huge damage to the financial institutions which employ them. And to cap it off, cases are only revealed publically when it becomes impossible to conceal them any longer, the editorialist wrote.

The consequences for UBS were serious, the paper concluded, with banks pulling back from investment banking.

Silver lining?

The Neue Zürcher Zeitung (NZZ) was the only paper to see a silver lining, stating that the verdict was “good news” for UBS.

“It is easier to claim that the bank was the victim of a criminal individual, something that can happen to the best businesses,” it wrote.

With the court decision, “the shame of the $2.3 billion trading loss is easier to bear”, it added.

Had Adoboli been let off, his behaviour would have been considered normal for any successful trader.

How could investment banks have presented themselves to the public had the rogue trader been found innocent, the NZZ wondered. “And how could the banks keep their bonus-hungry employees under control if such blatant and indisputable transgressions as Adoboli’s went unpunished?”

For the NZZ, the other result is that it has been proven that financial misdemeanours can be punished and that banks should declare them to the authorities rather than just discreetly fire the employees involved.     

Otherwise, “the bank will protect its reputation, but if there is not the deterrent of a prison sentence, it could prove in the midterm to be very costly for the institution.”  

Further afield

For the Financial Times, Britain’s main business newspaper, Adoboli and UBS still have something in common: “both have now to face the consequences of their grand aspirations.”

For the bank, the scandal sped up the downsizing of its investment banking unit. But the scandal also highlights “how the bank’s past failings keep coming back to haunt senior management while it is intent on looking ahead with a restructuring that will focus on wealth management.”

In its article on the verdict, the FT added that the case was a “sobering reminder of how rogue employees can exploit a system in which bankers are still rewarded for taking risks by being awarded huge bonuses.”

In the Independent, the editorialist asked what would have happened if Adoboli’s gambles had paid off.  

“If Adoboli's bets had worked out, […] it's fair to assume he'd still be wearing that suit rather than the prison uniform he put on this morning.”

UBS, he wrote, would have also been a winner too, along with former boss Oswald Grübel, who resigned after the scandal broke.

And “thousands of bankers axed as part of a retreat from gambling, sorry, investment banking, might have still been in their jobs rather than cosseted with their headhunters, and maybe their employment lawyers.”

swissinfo.ch



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