‘Rogue trader lost £1.4bn by gambling it away’ court told

A “ROGUE trader” accused of Britain’s biggest banking fraud was “a gamble or two away from destroying Switzerland’s largest bank for his own gain”, a court has heard.

Kweku Adoboli, 32, is accused of gambling away £1.4 billion while working as a trader for UBS. At one point he was at risk of causing the bank losses of $12bn (£7.4bn), jurors at Southwark Crown Court were told yesterday.

Adoboli, who is facing two counts of fraud and two counts of false accounting between October 2008 and last September, allegedly gambled away the money on high-risk trades aimed at boosting his annual bonuses and job prospects.

Prosecutor Sasha Wass, QC, said: “He is on trial because he lost his bank $2.3bn (£1.4bn). He fraudulently gambled it away. He also, in doing so, wiped around 10 per cent or about $4.5bn (£2.8bn) off the bank’s share price. He did all of this by exceeding his trading limits, by inventing fictitious deals to conceal this and then he lied to his bosses.

“Mr Adoboli’s motive for this behaviour was to increase his bonus, his status within the bank, his job prospects and of course his ego. Like most gamblers, he believed he had the magic touch. Like most gamblers, when he lost, he caused chaos and disaster to himself and all of those around him.”

Adoboli worked for UBS’s global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.

The bank set a daily trading limit for the ETF desk of $100bn (£61.5bn), and also used hedging to reduce risk – for example buying one type of investment and simultaneously selling a similar one to mitigate any loss. Prosecutors claim Adoboli failed to hedge several of his investments in order to make a bigger profit for the bank and larger bonus for himself.

Ms Wass said: “At one stage Mr Adoboli was in danger of losing the bank nearly $12bn US dollars (£7.4bn) of unhedged investments.”

Adoboli, of Whitechapel, east London, “fraudulently side-stepped” the bank’s rules that banned high risk and unauthorised trades, the court heard. Ms Wass said: “To put the huge trading loss in some sort of perspective, $2.3bn is enough to pay a year’s salary for nearly 70,000 new nurses or two Wembley Stadiums or perhaps even six new hospitals. This colossal loss arose purely as a result of Mr Adoboli’s fraudulent deal-making, which amounted, as you will see, to nothing more than gambling.”

She added: “Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler. He had become what is sometimes referred to as a rogue trader.”

Adoboli made false account entries over a two-and-a-half-year period to make it look as if the money he was gambling had been balanced by money coming in, it is claimed. The public school-educated former head boy got a job at UBS in 2003 as a graduate trainee and worked his way up.

Adoboli fell into a “gambling mindset” and very quickly the losses he was causing grew into billions, the court heard.

He eventually sent an e-mail to colleagues in September last year, outlining the hole in UBS’s accounts. Adoboli walked out of the bank saying he was going to the doctor’s, and, an hour later, sent a “bombshell” message from his personal e-mail account.