Holmes Report 16 Sep 2011 // 11:00PM GMT
The news of the UBS rogue trader losing $2bn has throw up some interesting communications issues – here’s a few of them:
1) The trader, Kweku Adoboli, was part of a team doing what is described as “Delta One” trading. This sounds like “Delta Force” - or maybe it should be renamed “testosterone trading”. Investment banks really need to think about their nomenclature.
2) UBS took about 18 hours to tell anyone, and then tried to fudge the issue about where the trader was. While the initial delay might have been for compliance or regulatory reasons, the decision not to say at least where the trader was based misunderstood both the power of both the internet and the ability of journalists. Mr Adoboli’s details were widely known within an hour.
3) The losses at UBS have given proponents of the Vickers’ committee’s central recommendation, a ringfence between retail and investment banks, a big boost - not least committee member Martin Wolf. It will get more support if, as is now expected, the Swiss regulators push for separation of UBS’ retail and investment banking operations.
4) Vince Cable and others who call investment banks “casino banks” must be feeling justified as well. Look out for references to the rogue trader in speeches at LibDem conference this week.
5) Mr Adoboli’s arrest and subsequent charges make this story a legal nightmare. They also make it a PR nightmare for UBS, as he will have numerous court appearances over the next couple of years, and maybe a long trial, where the whole sorry tale will come up again and again.
Fundamentally, the City has a difficult job when these sorts of things happen. Few people understand what goes on in the investment banks, some even suggested the boards of these banks don’t understand, and it is very difficult to explain the processes without falling into jargon.
The investment banks have to realise they have a job to do to show the “social good” of what they do. Making money isn’t enough, especially when they lose it.
Jason Nisse is director of strategic media relations at Fishburn Hedges.