Trader Kweku Adoboli stands accused of covering up a loss of £1.3 billion, dwarfing the £827 million lost by Nick Leeson when he brought down Barings Bank in 1995.
It has been alleged that Adoboli alerted the bank himself to his unauthorised trades, and that UBS' internal controls did not pick up the huge loss.
UBS is then understood to have examined his trading positions and informed the Financial Services Authority and the police.
The story is being handled by UBS’ internal PR team, led by head of corporate comms Dominik von Arx, overseen by global head of marketing comms Paul Kafka. A spokesperson at UBS did not know whether the bank was using external PR support to handle the story.
So far, the bank has limited its PR activity to issuing a single press statement. The spokesperson explained: ’There’s an investigation ongoing, so we need to make sure the information is correct.’
UBS said that further statements would be forthcoming, which may come before the weekend.
Insignia Comms founder Jonathan Hemus said UBS faced a ‘huge communication challenge’.
‘A loss of $2 billion is a big enough issue in its own right. Reports that the unauthorised trading was not picked up by UBS’ internal controls is an even bigger problem: this poses a threat to the organisation’s desired reputation as a well run, secure and stable operation.’
Hemus added that the 63-word statement on the UBS website represented ‘a tight-lipped approach to external communication’.
‘Unsurprisingly, this has left plenty of space for others such as ratings agencies, academics and other commentators to fill the vacuum. In a crisis of this magnitude, it is rarely the right strategy to stay so quiet.’
However, one City PRO who wished to remain anonymous defended UBS' brief response: ‘UBS is limited in what it can say by both legal and regulatory issues, but it did the right thing in coming out early and clearly and being as open as possible.
‘Paul Kafka, their comms boss, is a class act and knows what he’s doing, but he’s got a big job on there, to say the least.’