Tuesday 27 November 2012

The Mighty, Fallen: Tales of Two Leaky Banks

1.  Leaking Information

So then, Robert Peston.  Live by the leak, die by the leak, eh ?  His epic fail on calling the new Bank Governor is surely the final nail in the coffin of his reputation.  All those reporting scoops in the heady days of '07/08 - but not proper scoops, just his being used as a privileged conduit by a couple of highly-placed leakers.  Except now, he gets fed garbage.

Everybody has his number.  Here's how C@W can scientifically assess his decline: back in 2008, if we got a link on his BBC blog, we'd get thousands of hits.  Two years later and this had dwindled to hundreds or less.  Nowadays we don't even notice.

"As it happens, I did not think Mr Carney was in the frame because a well-placed Treasury source told me - in terms - that the unknown fifth person on the short list 'was very unlikely to get the job'". Pathetic. And wasn't he subdued yesterday, interviewing Boy Osborne?  Hope his fat Beeb package is success-based.

2.  Leaking Money

UBS - what a shower. When Kweku Adoboli was being sent down, the news channels played extracts from tapes of calls between UBS Compliance and the talented trader, with such gems as:  

Financial Controller: "So you're going to confirm exactly which counterparties are involved, and the quantum of the exposure".  

Adoboli:  "OK, will do". 

WTF ?  I fell off my chair.  There shouldn't be a trading floor on the planet that doesn't have deal-capture systems, confirmation processes and risk metrics which make these issues 100% transparent and subject to checks by staff who are independent of the traders, by the end of each trading day at very least, but near-real-time is the standard.  It should be like trying to do a transaction on the web: a required field pops up, and if the entry doesn't compute perfectly, instantly, you can't progress to the next stage at all.  (Given that Adoboli was in a 'Delta One' outfit - deals with the simplest risk profile - there aren't even any complex sums to do.)  

Phantom counterparties ?  Trade books he 'set up himself' ?  And all this 3 years after the banking crisis.  So UBS indeed deserves to get it in the neck.

Gaol.  Only language they understand - and corporate fines be damned.

OK, not you Pesto - ignominy will suffice.



Blue Eyes said...

Peston: LOL

He is so pompous. On a blog post yesterday he revisited a prediction he had made (to himself alone) a few years ago. As if people were interested. It doesn't help that the BBC treats him as an expert rather than a journalist. BBC articles are littered with quotes "... said Robert Peston".

Adoboli: the rumour at the time was that he'd handed himself in to point out the flaw in the system that he'd worked. That sounded far-fetched at the time but maybe not so much? Is it possible that the back office didn't even notice what he was doing?

Nick Drew said...


yes, I'd say so BE

back office didn't even notice?

well so it seems; but this is where I lose my grip on the story because I have seen with my own eyes banking systems that are so good, front-to-middle-to-back-office, and so real-time in the way they work, that it is hard to comprehend any household name bank isn't properly set up in this way

FFS, most of the energy companies I deal with who are trading to any great extent, could be confident of preventing that stuff

and not many of them are what you'd call leading-edge at this game

roym said...

Re Peston,
very interesting traffic metric you used. has someone else filled the void? i.e. who is currently leading the journalistic zeitgeist?

Peston(!) tweeted that the fine was less than the amount clawed back from staff. So no blowback on the board.

Barnacle Bill said...

Peston was too stupid to know he was just being used as a conduit for others.
Instead he thought it was all down to his great journalistic skills!
However, I still believe he should be put in the dock for his part in the HBOS shares scandal, but there are too many vested interests to allow that.
Peston might be forced to take a walk in the woods!

As for UBS, the mind boggles, didn't they have any checks/systems in place?

Anonymous said...

Adobolie was apparently making pot of money, his bonuses were high, but his gaffers bonuses were even higher, so on so as long as he apparently made money nothing was done, remember Nick Leeson and Barings the bosses said we don't how it is done, nothing happened until the brown stuff hit the fan.
Peston I rarely read his blog, have I missed something?

roym said...

one other thing i enjoyed about the Carney announcement was that we had the refreshing sight of a genuine first announcement in the House of Commons. I thought the conservatives promised more of this?

Blue Eyes said...

Announced TO Parliament, not discussed BY Parliament. Slightly better than Labour's spin machine, still not particularly plural or transparent.

Jan said...

Lay off Peston! I like him and his eccentric delivery style. I agree he was a useful conduit and has gone off the boil recently but hey his wife has just died.

Re UBS: it's a good way to avoid blame if you're a manager or director. Hang out to dry one of your subordinates. Maybe the lack of controls was deliberate so that this could happen if/when things go wrong. (It's fine when all is going well) (or am I ultra paranoid!)

Jan said...

By the way, I thought the BOE was supposed to be independent of government yet it was obviously GO's choice.

Just saying as I whole-heartedly approve of his choice. The BOE needs a shake-up.

CityUnslicker said...

UBS - let's nt pretend the Guy was not trying to hide it all. All he did when found out was to co=operate and explain what he had been doing.

How UBS did not check 'fictious' hedging is the whammy, as Nick points out, that surely is the point of the back office. But he found a way round the system, the embarrassing bit is that this was not rocket science to do!
He has though caused UBS to more or less close down investmetnt banking and delta one - so they won't be doing this again.

andrew said...

On Pesto, he is a bit marmite

Darcy Bussel / Sylvie Guillem
Robert Peston / Eddie Mair
Pesto / Tapenade

On UBS, the chances are that at some point someone in the team made lots of money and told the management that if they look too closely, the magic will evaporate.
If the management believed that, I think they are as culpable as Adoboli.
If the management disbelieved that, and did nothing, I think they are as culpable as Adoboli.

Sebastian Weetabix said...

I really liked Darcey Bussell; until she appeared on Strictly and opened her gob. Simply awful, yah?

Nick Drew said...

roym - Guido is still the heavyweight (though I'm willing to bet his stats are down from the heyday, too)

As regards the www-zeitgeist, that must be the shameless Daily Mail !

BB - they are both very fishy tales, indeed

anon - you haven't missed much. Sorry,Jan (and I wouldn't wish that on anyone) but I can't agree on Pesto. And 'deliberate lack of controls' ? Well I'm the one who finds the whole thing totally incomprehensible, so search me

On Carney I'm inclined to agree, time will tell

(but I don't much like the sound of his missus, ooh-errr)

andrew - as noted above I'm at a bit of a loss. What I do know is that it ain't enough just to bang up the trader, which is always the easiest thing to do. The penalty for many financial offences (as I recall from my own FSA/sfa-registered days) is 2 years and an unlimited fine ...

DtP said...

Surely Pesto got his briefings from the bunker because his dad is one of them but as soon as the Tories (well, Goldie crew light blue flyweights) got in the scoops strangely evaporated. A story I heard was that there was only 1 guy remaining at the treasury who'd been there before the Brown years after he set off on his moral compass bigoted tour.

idle said...

I agree with S Weetabix that Darcy's vocal performance on Strictly was deeply depressing and popped the bubble.

Another one who shocked us all wiv er estry Inglish innit was Samanatha Cameron. Wouldn't want to wake up to that.

Less of a surprise was to find out how irritating Rachel Johnson was on HIGNFY at the weekend. I was sure that she would be a pain and she was.

Nick Drew said...

I am much gratified to see that this thread has gravitated from trivia to the weighty issues of the day

Electro-Kevin said...

I was disappointed with Samantha Cameron too, though not in the way Idle is.

When I googled SamCam (in all honesty not realising it was the PM's missus's site) I was expecting to see housewife being bored - not a bored housewife !

My blog stats are about the same as in my site's hey day.


hovis said...

Jan: By the way, I thought the BOE was supposed to be independent of government yet it was obviously GO's choice.

If you resad Zero Hedge it was Goldman's choice :-)

Anonymous said...

Was Kweku Adoboli appointed to make up quota and then played the race card if called to account?

DtP said...

@Anon - 8.22 - Probably wouldn't have worked.


Weekend Yachtsman said...

"Hope his fat Beeb package is success-based"

Some hope, this is the public sector we're talking about.

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