Another rogue claim shows supervision is still a farce

That’s because the $2 billion (£1.3 billion) apparently lost by 31-year-old Kweku Adoboli effectively cancels out the $2bn UBS hoped to save in the costcutting programme of which the redundancies were a cornerstone.

A major rationalisation programme aims to improve the Swiss bank’s balance sheet by taking a large slice off the cost base at the same time as one of its under‑supervised traders allegedly goes financial skiing off‑piste causing an avalanche in the Alps.

It stirs lots of memories of similar episodes. Nick Leeson with his £827 million secretive gamble that brought down Barings Bank, Jerome Kerviel, who lost £4bn for the French bank Societe Generale, Yasuo Hamanaka, who lost a lot of copper, $2.6bn to be precise, in dodgy trading on the London Metal Exchange.

John Rusnak left a £690m black hole in the accounts of Allied Irish Bank by trading foreign exchange options badly until he ran out of all options but to confess. Then there is the $1.1bn loss suffered by Daiwa Bank of Japan from unauthorised bond trading by one of its US executives, Toshihide Iguchi. Not to mention Lehmans.

After each scandal, banks say they are rigorously tightening their controls to stop such catastrophically unauthorised trading. Regulators say they are upping their game. A far tighter supervisory function within banks is promised.

Then it happens again. And again. It’s like proprietary trading, trading on an institution’s own account rather than for clients, in investment banks. It seems sometimes from the denials that nobody in the banking industry is into proprietary trading at all. Then we find out they are.

I remember going along to one Royal Bank of Scotland press conference years ago when Sir Fred Goodwin denied any meaningful exposure to the American subprime disaster. That turned out not to be the case.

Of course, major banking fallouts can happen in the superficially calm retail divisions when credit bubbles fuel property speculation and banks are shown naked when the high tide goes out.

But there is still something ineffably impenetrable about the inner sanctum of investment banking that the periodic and shocking rogue trading scandals throw into stark relief.

Just how can these guys – and the traders involved are usually guys – get away with running up these sort of losses when most of us would have palpitations if we felt we had secretly lost our employer a piddling few million pounds or so? Perhaps it has to do with the speed with which trades are done; the real possibility that younger traders are better with the technology than their nominal bosses, who spent a fair amount of their early, formative careers with pen and ink; knowing how to hide the wrongdoing amid the electronics; traders playing on banks’ need for profits in these difficult times and hoping therefore that a laissez‑faire ethos will be the order of the day.

We don’t know whether Adoboli is guilty yet. But we do know it will not be the last time the apparent unstoppable phenomenon of rogue trading in investment banks baffles us all yet again.

Kingfisher proves not all is disastrous on high street

KINGFISHER, owner of B&Q, has joined fashion clothier Next in showing it is possible for retailers to navigate these difficult times.

The trick appears to be not to expect any tailwind from a clearly challenging sales backdrop, but instead focus on the things in your control: sourcing, costs, pricing and margins.

Kingfisher’s chief executive Ian Cheshire has espoused the maxim, and been helped further by the group’s strong overseas presence offsetting the tough UK market.