If you haven't heard already, it's all gone badly wrong at UBS.
The bank reported today that it's lost in the region of $2bn from "unauthorized trading by a trader in its Investment Bank" and could therefore make a loss in the third quarter.
It's not Jerome Kerviel ($7bn). But it's not good.
Net profits were down 36% year on year at UBS's investment bank in the first half and the cost ratio was 80.2%, up from 70% in the first half of 2010. A third quarter loss risks pushing the full year cost ratio up even higher and all but obliterating bonuses in the process.
The long term repercussions of this could be more wide ranging. Analysts are already
suggesting that the missing $2bn casts UBS in a poor light. The bank's ill-timed decision to move heavily back into FICC trading (and to increase VaR inopportunely) could come under even more scrutiny than it has already.
By the same token, the rogue has the potential to undermine the position of Oswald Grubel, who's spearheaded the trading rebuild. It's worth remembering that Kerviel ultimately led to the departure of Daniel Bouton following 'personal attacks' on his leadership.
For the moment, however, it's the bonus pool that will suffer. The disappeared $2bn could lead to more than the 300 redundancies previously predicted for London. It could also lead to an amplification of the political wrangling already said to be affecting the London office. But it will be very good for some risk staff.