Kweku Adoboli lost some $2.3bn for his employer, Swiss bank UBS. A couple of years ago Jérôme Kerviel lost over $6.5bn for Société Générale, while a dozen years back, Nick Leeson cost Barings $1.3bn and their independent existence. In all, around $10bn of losses were accrued by these three nice young men who were no doubt the pride of their parents. $10bn may seem a lot, but it’s less than a billion a year – a small price to pay for the continued freedom from regulation which enables investment banks to continue their rogue trading, which is hugely profitable for them, even if it costs the rest of us an arm and a leg.

One of the recent articles on Adoboli’s exploits, suggested that banks had failed to learn lessons and had not controlled individual traders effectively. Another suggested that securities had grown in complexity making it difficult to assess the trading risks involved. The internal risk controls within UBS were said to be obviously inadequate. The same was said about Baring’s in its day. But UBS, Société Générale and Barings, seem pretty typical members of the investment banking community. UBS may have differed slightly in requiring its female employees to wear flesh coloured underwear, but otherwise they seem fairly normal. The lack of risk control in investment banking must be endemic.
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