UBS scandal shows bank reform can’t wait to 2019

PRESSURE is mounting for radical banking reforms to be brought in more urgently following the arrest by City of London police yesterday of a UBS bank employee suspected of running up a £1.3bn loss through rogue trading.

Kweku Adoboli, 31, remained in police custody last night after being questioned at length about his recent trading activities. He is being held on suspicion of "fraud by abuse of position".

It has emerged that he posted on his Facebook page earlier this week the stark message: "Need a miracle". It never came.

UBS is expected to give more details today, but in the meantime it is widely speculated that Adoboli was caught out by the Swiss National Bank's sudden intervention last week to weaken the Swiss franc.

According to the BBC's business editor Robert Peston on the Today programme this morning, Adoboli owned up to his colleagues at UBS that he was in difficulty only hours before his arrest at 3.30 am yesterday.

The Daily Mail reports that Adoboli's immediate boss at UBS, John Hughes, resigned shortly after police took Adoboli away.

Adoboli, 31, a graduate of Nottingham University, is described on the social networking website LinkedIn as a director of exchange traded funds (ETF) and delta one trading at UBS.

The Guardian says UBS staff were shocked by the arrest. Adoboli and his colleagues "were regarded as 'stars' by their colleagues and top management".

Their shock, however, is as nothing compared to that of the British taxpayers who thought this sort of trading had been ironed out. Nor does it match the fury of the wise old men who have been calling for tough reforms in the banking industry.

The Lib Dem peer Lord Oakeshott told a Lord debate on the reforms suggested earlier this week in the Vickers Report that the UBS scandal "reminds us how much toxic banking risk remains in the system, and how urgent radical reform is".

Lord Myners, the Labour peer who was the City minister at the time of the 2008 banking crisis, told Channel 4 News last night that not only should reforms be brought in way before 2019 - Vickers's recommended timescale - but that they need to be far more radical than Vickers is proposing.  

Myners even raised the previously unthinkable notion that London could do without a lot of its "casino" investment bankers. "It is highly questionable whether much of the activity that takes place in investment banks is of any social or economic utility at all," he said.

Asked by presenter Jon Snow about the "huge gaping hole" that would be left in the British economy if bankers were driven abroad by tougher regulations, Myners claimed the real benefit to the UK economy of having these activities based in London was "quite small... This isn't quite the great national advantage that the banks seek to persuade us that it is." ·