By Reuters Thursday, 15 September 2011 3:16 PM
London arrested a man in connection with the case.
British police said they had arrested a 31-year-old man on suspicion of fraud. Swiss newspaper NZZ cited UBS as saying the trader worked in its London equities division.
'I can confirm that an employee of the bank was arrested in London in connection with the statement," a spokesman for UBS spokesman said on Thursday.
UBS warned it might post a loss in the third quarter after the rogue trades, a huge blow as the Swiss bank struggles to rebuild its credibility after years of crises.
The loss threatens the future of UBS's investment bank, which is being reviewed by Chief Executive Oswald Gruebel as part of a wide-ranging restructuring following heavy losses in the credit crisis and a damaging scandal over bankers helping rich US clients dodge taxes.
UBS said it was possible that the trading loss could cause an overall loss in the third quarter of this year. It also said that no client positions were affected.
"The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn," the bank said in a brief statement.
In an internal email the bank said the unauthorised trade was "distressing" and it would "spare no effort" to find out what happened.
UBS employed almost 18,000 people in its investment bank at the end of June, most of them based outside Switzerland, particularly in London and the United States.
A spokesman declined to give any further details.
UBS shares were 5.5 percent lower at 10.33 Swiss francs at 9:37 a.m. British time, far weaker than the European banking sector, which was up 1.3 percent.
"[This] is a staggering demonstration that all the clever systems that the banks now have, especially after the financial crisis, still cannot stop a determined individual getting round them if they want to," said Chris Roebuck, Visiting Professor at Cass Business School in London.
"It will yet again confirm to the majority of shareholders who are Swiss that investment banking is not 'proper' banking, as private banking is."
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