My 5 years at SBC/UBS, there were quite a few incidents of heavy trading losses, with the 800M SF loss in the LTCM implosion along.
However, what seperate the UBS losses from China's is that:
1. There is a risk averse culture at the swiss bank as well as very advanced risk management systems and control procedures. The bank also set aside suitable prevision (cash reserve) to cover any trading loss it might arise.
2. The transparency UBS offered in each incident and a full recount of what happened and lessons learned in each case.
3. The very high level executives who were fired or resigned promptly to take responsibility for these incidents. In the LTCM case, the Chairman(exCEO of UBS before the merger) of the bank resigned to take the blame because the trading position was taken before the SBC/UBS merger.
4. With in the bank, staff training and advanced knowlege about market and risk management are mandatory. The 3T pillar of success for career development in the trading area: Training, Trading and Technology are upheld and carried out even today.
USB learned from these harsh lessons and becomes a stronger institution.
Can you say the same for the Chinese institutions ?
