UBS trader admits losing control over billion pound deals

Kweku Adoboli tells court his Swiss bank colleague told him to 'push the boundaries so far that you receive a slap on the wrist'

A City trader accused of losing UBS £1.4bn through reckless and illicit deals has told a court he was actively encouraged by superiors to "push the boundaries" so as to maximise profits.

Kweku Adoboli, 32, told Southwark crown court on Tuesday that traders at all investment banks viewed compliance policies as "aspirational" rather than fixed and knew they had to bend rules if they were to achieve the goals set out for them by managers.

The court was told that Yassine Bouhara, former co-head of equities at UBS, wrote to Adoboli in an email: "You don't know what your limits are until you push the boundary so far that you receive a slap on the back of the wrist."

Quizzed on this by the defence barrister, Paul Garlick QC, Adoboli said: "There were no secrets, there was no hiding, there was no holding back. We were told to go for it, we went for it. We were told to push the boundaries, so we pushed the boundaries.

"We were told you wouldn't know where the limit of the boundary was until you got a slap on the back of the wrist. We found that boundary, we found the edge, we fell off and I got arrested."

Adoboli is accused of running an illicit, off-book set of trades which were not properly hedged by balancing deals, a banned tactic which boosts potential profit but exposed UBS to greater risk. While Adoboli's "umbrella" account, as he termed it, initially generated profits it went disastrously wrong during the summer of 2011, at one point giving UBS potential liabilities of £7.5bn, which the prosecution says could have destroyed the banking giant.

The Ghanaian-born, British-educated trader insists his umbrella account was known about throughout the exchange traded funds (ETFs) desk on which he worked, and that his only intention was to make money for UBS.

Adoboli told the court that the significant losses began after he was persuaded by superiors, against his own judgement, to switch his trading position to assume an upturn in European markets which never came.

"The real problem was a result of the pressure to flip my position from short to long, this broke my control," he said. "I absolutely lost control, I was no longer in control of the decisions around the trades we were doing."

He described the effect on his personal life as the losses mounted up, describing an evening in July last year when he was supposed to go for dinner with his girlfriend. He said: "I went a bit catatonic. I was curled up on my bed. She was asking me what was wrong. I just couldn't explain."

His girlfriend eventually persuaded him to tell his superiors, Adoboli added: "In the end she was the strength. She was the person who said to me: 'Look, Kwek, if you can't do this, if you can't fix this, then look within yourself and maybe go and tell someone. This is going to kill you. You can't keep fighting this battle that you are clearly not winning.'"

Adoboli was arrested in September 2011 after walking out of the UBS office and writing an email to senior staff outlining what had happened. Adoboli told the court on Tuesday that after leaving the office he first went to St Mary's Church, near the bank's London headquarters, to pray.

Adoboli denies two counts of fraud and four counts of false accounting between October 2008 and last September. The trial continues.

Contributor

Peter Walker and agencies

The GuardianTramp

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