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UK police extend interrogation of suspect in UBS's $2 billion rogue trade loss
LONDON (AP) ' Police in London have extended their interrogation of the man suspected of causing a $2 billion loss for Swiss bank UBS.
UBS trader Kweku Adoboli was arrested at 3:30 a.m. Thursday, and normally police cannot hold a suspect longer than 24 hours without pressing charges.
City of London police said Friday morning, however, that they had obtained a 12-hour extension.
Under British law, a police superintendent can extend the 24-hour detention period by up to 36 hours for serious crimes. After that, police would need to get a court order to continue questioning for up to 96 hours more.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
GENEVA (AP) ' UBS shares rose slightly on Friday as investors cautiously sought to capitalize on the sharp drop suffered in the wake of the Swiss bank's revelation that it suffered an alleged $2 billion loss due to rogue trading.
Shares initially jumped 2 percent on the Zurich exchange before settling at 9.80 Swiss francs, an increase of 0.6 percent following their 10 percent slump the day before.
Swiss newspaper Tages-Anzeiger reported Friday that UBS AG is to cut jobs at its investment banking unit that suffered the loss. Citing unnamed sources it said the cuts would be announced Nov. 17.
The paper also reported that the entire trading team in London where the alleged unauthorized deals took place had been suspended.
UBS spokesman Andreas Kern declined to comment on the report.
Police in London said they arrested 31-year-old equities trader Kweku Adoboli early Thursday morning, hours after UBS uncovered the alleged unauthorized trades.
The incident jolted the international banking industry, which has sought to put stricter controls on its traders in the wake of a 2008 scandal at France's Societe Generale, when trader Jerome Kerviel gambled away euro4.9 billion ($6.7 billion), and the infamous case of Nick Leeson, who made so many unauthorized trades that it caused the collapse of the British bank Barings in 1995.
Swiss media on Friday questioned how one UBS trader could have managed to cause a $2 billion loss without others around him noticing sooner. Respected banking professor Hans Geiger told Swiss television station SF he doubted the lone trader account put forward by UBS.
Meanwhile commentators and politicians called for senior managers at the Swiss bank to take responsibility for the loss, which UBS said could put its third-quarter results in the red.
Chief executive Oswald Gruebel was brought in two years ago to rehabilitate the bank's damaged reputation after a series of missteps that included massive losses in the subprime mortgage market and an embarrassing U.S. tax evasion case.
The scandal casts doubt on his ability to improve the bank's image.
Moody's ratings agency cited such concerns when on Thursday night it placed UBS's credit grade on review for a possible downgrade.
Although it said the $2 billion losses would be manageable for a bank the size of UBS, they "call into question the Group's ability to successfully complete the rebuilding of its investment banking operations."