Zurich - Spa
Swiss bank UBS came under increasing pressure to shrink or sideline its investment bank business -- source of a $2 billion rogue trading loss -- as ratings agencies warned lax risk management could prompt downgrades, Reuters reported. The bank is expected to announce a major restructuring involving the loss of thousands more jobs at an investor day in New York on November 17, the Tages-Anzeiger newspaper said on Friday, as it seeks to reassure private clients. Analysts said the massive loss, announced on Thursday, was the final nail in the coffin for UBS\' investment bank which has struggled, like others in the industry, against falling markets and tough new regulation as well as the soaring Swiss franc. The Swiss People\'s Party, the country\'s biggest and a member of the ruling coalition, wants UBS to split off its investment bank from its wealth management arm and pressure for it take radical action is likely to mount in the wake of the scandal. A UBS spokesman declined to comment. Ratings agencies Standard & Poor\'s, Fitch and Moody\'s all put the bank\'s credit rating on negative watch. Fitch said the incident \"strengthens the arguments for UBS to down-scale its investment banking unit\" while S&P added: \"The loss is a setback to UBS\' efforts to rebuild its reputation and demonstrate strengthened risk management following its weak performance in 2007-2009.\" The $2 billion that UBS said had been lost by a London-based trader in rogue dealing effectively cancelled out the first year of savings from a recently-announced cost-cutting plan involving the loss of 3,500 jobs. London police are still holding the suspect they arrested in the early hours of Thursday on suspicion of fraud. Sources close to the situation named the suspect as 31-year-old Kweku Adoboli , a UBS director of exchange traded funds . UBS declined to give any new information on the case early on Friday. London police also declined to comment but will have to charge, bail, release or formally extend the detention of the suspect later on Friday. UK law firm Kingsley Napley has been hired to represent Adoboli, a spokeswoman for the company confirmed. The firm also advised previous rogue trader Nick Leeson, whose $1.4 billion derivatives losses triggered the collapse of Britain\'s Barings Bank in 1995. Most market speculation circled around the possibility that Adoboli was caught out by the shock decision by the Swiss central bank last week to impose a cap on the soaring franc, sending the currency plunging nearly 9 percent.