UBS was under pressure on Friday to explain how its managers failed to catch a $2 billion loss due to rogue trading, with experts calling into question the Swiss bank’s ability to turn around its scandal-hit image.
As police in London obtained a 12-hour extension to question the trader, 31-year-old trader Kweku Adoboli, the bank’s investors and the wider industry wondered about the fallout, both for UBS as a storied Swiss financial institution and for the banking sector.
Commentators and politicians called for senior managers at UBS to take responsibility for the loss, which the bank said could put its third-quarter results in the red. Ratings agency Moody’s put UBS’s credit grade on review for possible downgrade, citing worries over the future of its London-based investment unit.
UBS shares on Friday recovered a fraction of the losses they suffered the day before. Investors took the chance to buy UBS shares cheaply, sending their price up 2.5 percent to 10 Swiss francs ($11.45) on the Zurich exchange by noon. Shares had slumped 10 percent the day before, after the bank said a lone employee had caused the massive loss with unauthorized trades.
Swiss media 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.
Police in London continued their interrogation of Adoboli. Normally police cannot hold a suspect longer than 24 hours without pressing charges. But 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.
UBS spokesman Andreas Kern declined to comment on a report in Swiss newspaper Tages-Anzeiger on Friday, that the entire trading team in London where the alleged unauthorized deals took place had been suspended.
Kern said the paper’s report of fresh job cuts at the investment bank referred to a reduction of about 1,600 posts already announced last month as part of a plan to save some 2 billion francs over the next two years.
The international banking industry has been trying 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.
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.”
____
Bob Barr contributed to this report from London.
NEW YORK
Round a bend in Cambodia’s Tatai River and the virtual silence of a tropical idyll turns suddenly into an industrial nightmare.
Lush jungle hills give way to a flotilla of dredgers operating 24 hours a day, scooping up sand and piling it onto ocean-bound barges. The churned-up waters and fuel discharges, villagers say, have decimated the fish so vital to their livelihoods. Riverbanks are beginning to collapse, and the din and pollution are killing a promising ecotourism industry.
What is bad news for the poor, remote Tatai community is great tidings for Singapore, the wealthy city-state that is expanding its territory by reclaiming land from the sea. Sand from nearby countries is the prime landfill and also essential building material for Singapore’s spectacular skyline.
As more countries ban its export to curb environmental damage _ entire Indonesian islands have been all but wiped off the map _ suppliers to Singapore scour the region for what still can be obtained, legally or not. Cambodia, a poor country where corruption is rife and laws are often flouted, is now the No. 1 source.
Singapore is by no means the only nation taking part in what is a global harvest of sand from beaches, rivers and seabeds. Officials and environmentalists from China to Morocco have voiced concern and urged curbs. As construction booms in emerging economies and more sources dry up, however, exploitation of the remaining ones is likely to intensify.
Sand mining began anew in May on southwestern Tatai River, which empties into the ocean almost directly north of Singapore, across 1,300 kilometers (800 miles) of open water.
Despite denials by the main owner of sand mining rights in Koh Kong province, two Cambodian officials told The Associated Press that the sand is destined for the island nation.
Singapore will not say where its sand comes from; the Construction and Building Authority said it is not public information. The National Development Ministry said the state’s infrastructure development company buys it from “a diverse range of approved sources.”
The mining visible on the Tatai River clearly violates some of Cambodia’s own legal restrictions, not to mention a recent government order to suspend it temporarily.
Vessels of a Vietnamese company were tracked by boat from about 10 kilometers (6 miles) upriver to the Gulf of Thailand, where nearly a dozen seagoing barges, tugs hovering around them, took on the sand.
The AZ Kunming Singapore, a 5,793-ton (5,255-metric ton) barge pulled by the AZ Orchid, was seen arriving empty from the open ocean, its tug flying a Singaporean flag. Both are registered with the Singapore government, which would not comment on the barge’s cargo or destination.
Ships from several countries, including China, were spotted in sand-mining operations in Koh Kong province, where residents joked about going to Singapore and planting a Cambodian flag there.
The vessels included one from Winton Enterprises, a Hong Kong-registered group that was subcontracted to export sand to Singapore, according to Global Witness, a London-based environmental group that published a detailed account of the trade last year.
The report said that miners had penetrated protected mangrove, estuary and sea grass areas, breeding grounds for marine life along a coastline and hinterland harboring some of the country’s last wilderness areas.
Cambodia’s cabinet spokesman, Siphan Phay, who was investigating the issue in Koh Kong, appeared angry that the temporary halt order was being ignored. He described the activity as illegal mining destined for Singapore, a surprising statement given that government ministers awarded the concession.
A police officer in the economic crime division, who demanded anonymity given the issue’s sensitivity, also said the sand is going to Singapore.
Ly Yong Phat, who holds the major concession in Koh Kong, has at times openly acknowledged the Singapore connection. But in a recent AP interview, amid tightening restrictions and mounting criticism, he said his company had not shipped sand to Singapore for more than a year because “our sand did not meet their standards.”
The dredging, he added, was for local sale and to deepen river channels.
However, a Malaysian company, Benalec Holdings, said it was ready to tap up to 530,000 tons for a reclamation project in Singapore from several sources in Cambodia, including Ly Yong Phat’s LYP Group.
Known as the “King of Koh Kong,” Ly Yong Phat is one of Cambodia’s biggest tycoons and a senator with close ties to Prime Minister Hun Sen. His holdings include hotels, a casino and agricultural plantations.
Land reclamation has enlarged Singapore by more than a fifth, and up to 100 square kilometers (nearly 40 square miles) more are slated for reclamation by 2030. What was once seabed is now Changi, among the world’s finest airports, and more recently the Marina Bay complex, which includes a 2,560-room hotel and casino developed by Las Vegas Sands Corp.
Mountains of sand are needed for such fills. U.N. statistics show Singapore imported 14.6 million tons last year, ranking it among the world’s top customers. Global Witness estimated that nearly 800,000 tons a year, worth some $248 million, were streaming to Singapore from Koh Kong alone.
The U.N. figures show that Cambodia supplied 25 percent of Singapore’s imports in 2010, followed by Vietnam, Malaysia, Myanmar and the Philippines. With its secrecy and lax enforcement of environmental regulations, Myanmar could emerge as a major supplier.
The damage caused by sand extraction has spurred clampdowns on exports.
Malaysia imposed a ban in 1997, though the media there frequently report on massive smuggling into neighboring Singapore. Former Prime Minister Mahathir Mohamad complains that sand pirates are “digging Malaysia and giving her to other people.”
An Indonesian ban came in 2007, following years of strained relations with Singapore over the sand on islands lying between the two countries. When miners finished with Nipah Island, reportedly all that was left was three or four palm trees protruding above the waterline. Environmental groups say smuggling is believed to be continuing.
Vietnam banned exports late last year.
Cambodia outlawed the export of sand from rivers in 2009 but allows it from some seabeds. Recently, some government officials said that rivers where seawater flowed into fresh water, replenishing sand naturally, were exempt.
Global Witness spokesman Oliver Courtney said the trade in Cambodia revealed a “mismatch between Singapore’s reliance on questionably sourced sand and its position as a leader for sustainable development.” The city-state prides itself on environmentally sound urban planning.
The dredging of the Tatai River began on May 17 “with a fury,” creating a veritable traffic jam on the water, said Janet Newman, owner of the riverside Rainbow Lodge.
“Before you could see crab pots bobbing in the river everywhere and fishermen going out. Now there is nothing and nobody,” the British woman said.
Chea Manith of the Nature Tourism Community of Tatai said 270 families along the river have seen an estimated 85 percent drop in catch of fish, crab and lobsters and were being forced to eke out a living from small garden plots. Tourists have all but vanished.
Armed with a petition, village leaders, tourism operators and a wildlife group met with Ly Yong Phat in early July. He appeared sympathetic, Newman said. He substantially reduced the dredging and has promised to stop altogether in October.
A subsequent letter from the Minister of Water Resources and Meteorology ordered the LYP group to halt operations temporarily on the Tatai, citing a breach of regulations. The letter was obtained by Cambodia’s Phnom Penh Post newspaper, which made it available to the AP.
Hun Sen himself expressed concern over the mining in the river.
“We hoped that the prime minister’s recent promise to review the impacts of the sand trade would lead to proper regulation of dredging operations,” said Courtney of Global Witness. “Unfortunately, the pledge does not appear to have been followed up with meaningful action.”
The mining has continued on the Tatai, and violations, such as dredging closer than 150 meters (165 yards) from riverbanks, were clearly evident.
The Post also obtained a Ministry of Industry, Mining and Energy letter extending LYP Group’s concession in Koh Kong until Sept. 2012.
“We are just little people. We cannot do anything,” Chea Manith said.
Newman sounded a more optimistic note. “It’s my hope that the LYP Group will become sympathetic through this experience of having seen the reaction from people passionate about protecting their environment,” she said. “It would be sad if they just went somewhere else to dump the same on others.”
Aetna says its second-quarter net income rose 9 percent in part because it benefited from a continued slowdown in the use of health care services by its members.
The health insurer also raised its full-year operating earnings forecast on Wednesday.
Aetna earned $536.7 million, or $1.39 per share, for the three months ended June 30. That’s up from $491 million, or $1.14 per share, in the same period last year.
This beat the $1.07 per share that analysts expected.
Revenue slipped 3 percent to $8.34 billion from $8.55 billion, but still topped Wall Street’s $8.25 billion.
Total medical membership fell 2 percent to 18.2 million members.
Aetna, based in Hartford, Conn., is the third-largest commercial health insurer based on both enrollment and revenue, trailing WellPoint and UnitedHealth.
Britain’s competition regulator has affirmed a preliminary ruling that BAA, the owner of Heathrow airport, most dispose of London’s Stansted airport and one Scottish airport.
The Competition Commission said Tuesday that it saw no reason to change its preliminary ruling in March, which it said was the right decision for air travelers. The ruling also requires BAA to sell either its Edinburgh or Glasgow airport in Scotland.
It says the sale process should start within three months.
BAA, owned by a consortium headed by Grupo Ferrovial of Spain, had fought a long regulatory and legal battle against being forced to sell. It says it will consider contesting the latest ruling in court.
China’s premier says the government will keep controls on property deals in place to help fend off a speculative bubble, reflecting top-level unease over limited progress in cooling the overheated market.
Wen Jiabao urged local governments to abide by efforts to cool the property market and to meet targets for building more affordable public housing. Such housing is meant to accommodate ordinary families unable to afford commercial property due to surging prices.
“Pressure on housing prices in some cities is still strong, and in some places controls have been relaxed,” a government statement cited Wen as telling a Cabinet meeting Thursday. “The current real estate market is at a critical period. We must unswervingly stick to controlling the trends,” it said.
As of the end of June, construction had begun on more than 5 million units of public housing, more than half the annual target, the statement said.
State media say more than 30 million people are having trouble finding affordable housing, and developers have been lukewarm on investing in the relatively unprofitable part of the market.
Noting uneven progress and low use rates in some areas, Wen called for fair and equitable distribution of such housing and curbs on surging rents no fax cash advances.
Investment in property rose by nearly a third over a year earlier in the first half of this year to 2.63 trillion yuan ($404.6 billion), according to data released Wednesday.
Despite 15 months of efforts to cool the housing market, prices remain firm, according to a recent report by Standard Chartered Bank, which surveyed the situation in both large cities and in smaller provincial cities.
The government has raised interest rates and bank reserve requirements, repeatedly. Some cities have also hiked the amount of money needed for downpayments and imposed restrictions on families’ purchases of second and third properties. But prices are still rising, though at a slower pace.
China’s economic growth slowed to a still-robust 9.5 percent in April-June, giving Beijing room to tighten controls to fight surging inflation, which hit a three-year high of 6.4 percent in June as food prices raced higher.
Such increases worry China’s communist leaders as they erode public trust in their ability to continue deliver improving living standards.
It feels like MySpace has been the butt of every social media joke for almost two years. Lapped by rival services, the hits just keep on coming, whether it is in new mocking viral videos or last year’s Buzzfeed post about the
As gas prices continue to climb, drivers need every edge they can get to save money at the pump.
One area where motorists can take action is with driving habits and car maintenance schedules, which can help improve a vehicle’s fuel efficiency.
What measures can drivers take to get the most out of a full tank of gas? Several websites can provide a variety of tips and insights.
Car Care Council
Provides car maintenance and driving suggestions to help lower fuel costs.
http://www.carcare.org/car-care-articles/fuel-saving-tips
Edmunds.com
Offers five key maintenance tips that can help save gas.
http://www.edmunds.com/ownership/maintenance/articles/105528/article payday loans no teletrack.html
FuelBudget.com
Covers several gas-saving tips, with additional information on gas-rebate cards and hybrid cars.
http://www.fuelbudget.com/fuel-economy.html
Fueleconomy.gov
Spotlights gas-saving tips related to driving habits, auto maintenance and choosing a fuel-efficient car.
http://www.fueleconomy.gov/feg/drive.shtml
Federal Trade Commission
Interactive graphic highlights parts of the car for gas-saving tips.
http://www.ftc.gov/bcp/edu/microsites/energysavings/savegas/flash.html
Pfizer Inc. says its first-quarter profit rose 10 percent, due to lower costs for production and research and a smaller tax bill.
The world’s biggest drugmaker by revenue says its net income was $2.22 billion, or 28 cents per share. That’s up from $2.03 billion, or 25 cents per share, in 2010’s first quarter.
Excluding one-time items, income would have been $4.81 billion, or 60 cents a share, down just over 1 percent from a year ago.
The maker of cholesterol blockbuster Lipitor and impotence pill Viagra says revenue was $16 installment payday loans.5 billion, down a half-percent from $16.58 billion a year ago.
Analysts surveyed by FactSet expected earnings per share of 58 cents and revenue of $16.59 billion. Typically, they exclude one-time items.
(This version CORRECTS the revenue forecast in the last paragraph to $16.59 billion.)
Most economists expect the Bank of Canada to hold the line Tuesday on its lending key rate, keeping it at the one per cent level.
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