Kweku Adoboli, a UBS authorised trader whose speculative "unprotected, unhedged, incautious and reckless " trading resulted in a loss of 1.4 billion pounds sterling, has been convicted and jailed for 7 years by the Southwark Crown Court in London.
This is not the first time that a bank has suffered huge losses. Were there not also the cases of Leeson and Kerviel ? If banks do not change and do not tighten their control procedures, there will be other catastrophies.
All these traders were accused of fraud and found guilty. There is, however, another problem. Were the directors of the different banks not also guilty of negligence due to inadequate control systems ? Should their shortcomings not also have been judged in court ?
There is a basic truth in the dictum which states that delegating responsibilities does not mean abdicating from those responsibilities, particularly when one is paid for a responsibility.
Also, sometimes traders make profits, huge profits in fact. The bank directors know this. Have they in the past taken steps to control these huge profits or the risks involved ? Or have they just been too happy that their bonuses have also increased as a result.
Finally one must recognise the fact that banks have completely changed since computers started to dominate daily work. There was a time when banks borrowed money, paid interest and then reloaned the money and charged interest. Now banks are more interested in having a quick bet on stock exchange prices !
Governments everywhere need to decide just exactly what service they expect from banks !
.
No comments:
Post a Comment