UBS trader Kweku Adoboli rode a dealmaking rollercoaster in the summer of 2011 that drove up his losses by nearly $2 billion in a single month, a London court heard on Friday.
Reuters reports that one of Adoboli's former line managers, John DiBacco, told Southwark Crown Court: 'He was losing money and he kept doubling down thinking that eventually he'd make it back'.
DiBacco, however, rejected suggestions that UBS turned a blind eye to traders exceeding limits as long as deals were making money.
'Banks are interested in profits but we don't throw out the rules to make those profits', said DiBacco, who was dismissed by UBS as a result of the Adoboli affair.
In the meantime, Bloomberg reports that UBS’s London traders took more risks than their counterparts in other countries, DiBacco testified.
DiBacco, who worked in New York, said that during an interview after Adoboli’s arrest last year that he was 'surprised' at the large positions traders in London were taking. He took over responsibility for the ETF desk in April 2011 and imposed intraday trading limits of $100m and $50m overnight, he testified.
DiBacco said that he talked to Adoboli and other traders frequently and had to approve any transactions that exceeded their limits. He sought to lower risk on the team and said he recalled a time in August 2011 when he told Adoboli he wanted 'no risk' because the market was too volatile.
'There was a lot of risk-taking happening in London that was of a proprietary nature and not strictly for facilitation of clients', DiBacco said in the interview after Adoboli’s arrest, referring to risking the bank’s money. 'There is a culture that was risk-seeking and not risk-averse'.
The Financial Times reports that DiBacco said he was in London at a UBS management presentation when he received Adoboli’s 'bombshell' email on his BlackBerry.
He said that his reaction was 'I didn’t believe it', and had to read it twice before he ran back to the UBS building.
The trial continues.
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