UBS ups rogue trader losses to $2.3bn

Swiss banking giant UBS has raised its estimate of the losses allegedly caused by rogue trader Kweku Adoboli to $2.3bn (£1.5bn).

The bank raised its forecast - which was previously $2bn - while revealing more details of the suspected fraud.

UBS said the fraud came to light after the bank began making enquiries, and it is now understood it was carried out using a series of fake trades.

According to the Financial Times, Adoboli covered up huge loss-making positions by placing a series of fake trades alongside them.

The technique is the same one used by Jerome Kerviel who lost French bank Societe Generale €4.9bn back in 2008.

UBS said the loss-making positions were built up in index futures on the S&P 500, Germany's Dax, and the Euro Stoxx.

These indices have fallen heavily in the last two months as world markets dropped on fears over European and US economic growth.

The trader then 'hedged' the positions with a series of fictional trades which in reality did not cover his bets.

UBS boss Oswald Gruebel has come under fire over the incident - which has wiped out a huge chunk of the bank's profits for the year - but he has insisted he will not resign.

"I'm responsible for everything that happens at the bank," Mr Gruebel told Swiss Sunday newspaper, der Sonntag. "if you ask me whether I feel guilty, then I would say no."