Adoboli has done us all a favour: we all now know casino banks are definitely a waste of time and shareholders’ money.
UBS has let the next rogue trader run up losses of $2.3 billion over three years without anyone noticing, presumably as they were all too busy counting their bonuses. The strangely absurd case of Kweku Adoboli – the alleged fraudster – gives the complete lie to the modern City and its monstrous behaviour in recent years, driven by thoughtless greed and sheer stupidity and precious little else on the trading desks of the so-called “investment banks”, or rather casinos.
You can just imagine the conversation in the old pre-regulated City, where basic honesty prevailed and overt greed, once detected, meant expulsion from the City forever.
But Adoboli has done us all a favour: we all now know casino banks are definitely a waste of time and shareholders’ money, and should all cease trading asap, as it wouldn’t make the slightest difference to the real economy or GDP.
Adoboli, you see, had stars in his eyes when he was promoted to the trading desk known as Delta One, an important sounding destination, like what a unit of the crack elite forces are to the defence of the realm – Delta One, no less! And what was Adoboli to do at this high point of the capitalist world? Why, he was to trade Global Synthetic Equities! What more noble activity could there ever be?
Global Synthetic Equities? Yes, you might well ask. Well, they are exactly what it says on the tin, they are global, and synthetic, shares. Got it? Adoboli was meant to trade these non-existent shares as a quasi-insurance policy for all the real share trades the bank was engaged in for its clients and itself. (Don’t even ask why a bank is trading shares for itself, which is another absurd aspect of casino banking, now banned by the Volcker Rule in the US).
The trouble with these global synthetic shares was they didn’t do what Adoboli thought he had read on the tin: the only thing insured by Adoboli’s shares was massive losses for the bank, whereas Adoboli thought they would do the opposite, namely prevent massive losses. And that’s what his bosses thought they would do as well, which only goes to show that Adoboli’s bosses, with their massive bonuses, are about as stupid and gullible as Adoboli has just proven to himself and to the rest of the world, because none of them could read the instructions on the lid of that tin of synthetics.
The cash that has flowed out of the front door of UBS, however, was real enough, but created profits at other investment banks around the world, generating yet more bonuses. That’s how casinos lose and make money after all!