Any other business | 24 September 2011

UBS: the bank that lost the formula to turn Mr Hyde back into Dr Jekyll

‘Thank you, UBS,’ writes the FT columnist Martin Wolf, who as a member of the Vickers commission on banking reform was one of its strongest proponents of the ‘ring-fencing’ of retail banks to protect them from the casino follies of securities trading. There could hardly have been ‘a better illustration of the unregulatable risks to which investment banks are exposed’. Indeed, the management failure that allowed Kweku Adoboli to rack up $2.3 billion of trading losses over a three-year period offers such vivid evidence for the ‘casino’ label that only the owners of real casinos can now seriously object to it — on the grounds that they apply far tighter risk controls than banks do. I’m reminded of a scene in Martin Scorsese’s 1995 film Casino, in which one ‘rogue trader’ has his skull crushed in a vice.