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UBS hit by rogue trader

A UBS worker has been arrested on suspicion of fraud.

A man has been arrested in London on suspicion of a rogue trading incident that has cost bank UBS around $2 billion.

The City of London Police arrested 31-year-old Kweku Adoboli early this morning on "suspicion of fraud by abuse of position". An investigation into his connection with the incident is underway.

Zurich-based UBS brought the incident to light in the last 24 hours and revealed that it could push them into the red for the current financial quarter. This sparked a near 10 per cent fall in the bank's share price in early trading.

Adoboli is believed to work in the bank's equity division, where deals with exchange traded funds (ETFs).

In a statement, UBS said that they were trying to get to the bottom of the incident: "UBS has discovered a loss due to unauthorised trading by a trader in its investment bank. The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn. It is possible that this could lead UBS to report a loss for the third quarter of 2011."

Banking experts have said that the loss could be extremely damaging to the reputation of UBS, who currently employ around 6,000 people in the UK.

Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.