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EXCERPTS FROM THE FALL OF UBS

By Dirk Schutz
Translated by Sigrid Stangl

Copyright © 1998 by Bilanz. Excerpted and abridged with permission.

Why did Cabiallavetta agree to such a deal? asked The Economist on January 31, 1998. Mathis Cabiallavetta was CEO of Union Bank of Switzerland, and the deal was a merger between UBS and Swiss Bank Corp., a smaller rival. One reason, The Economist speculated, was that there was, “in UBS's London-based derivatives business, a hole of unknown, but possibly huge, proportions.” By mid-1997, the bank's trading division, built by Cabiallavetta, was falling apart. Its most important business—complex equity derivatives trading—had experienced sizeable losses. The Economist estimated losses of 1 billion Swiss francs, but numbers of 2 billion Swiss francs to 3 billion Swiss francs were also circulating. The Financial Times estimated the loss at 650 million Swiss francs.

After intense pressure from the press, UBS released a statement on January 30, 1998, that put losses in its equity derivatives business at 350 million Swiss francs ($239,480,000). The bank also announced that its proprietary equity trading department had lost 100 million Swiss francs in 1997. To arrive at the second number, the bank had combined losses from the global equity derivatives group with gains in proprietary equity trading. That strategy allowed it to avoid assigning a number to the actual losses in equity derivatives.

But it was exactly that number that drove speculation, and it was nowhere near 350 million Swiss francs. At the end of the year, UBS London wrote off the loss at 256 million pounds, according to a high-ranking London source—and published here for the first time. At year-end exchange rates, that meant a loss by the equity derivatives department of 617 million Swiss francs, or $422,169,000.

Was this the real reason for the UBS/SBC merger? And were there, as The Economist also speculated, parallels to the decline of Barings, the respected British investment bank brought to ruin in early 1995 by 28-year-old Nick Leeson's derivatives trading? In the UBS case, Leeson's role might have been played by a former Israeli army officer born in 1950 in Haifa, the Israeli seaport, who had been a member of an elite paratrooper division and a decorated fighter in the Arab-Israeli Wars of 1967 and 1973. His name was Ramy Goldstein, although few UBS employees in Switzerland knew who he was.

Goldstein was the head of GED, the global equity derivatives unit at UBS, and over the years had become the bank's shining star and highest-paid employee. Reliable sources estimated that his bonus for 1996 was approximately 15 million Swiss francs, or $11,481,000. The same year, Cabiallavetta paid taxes on an income of 2.1 million Swiss francs, and Robert Studer, the chairman of the board, earned 1.4 million Swiss francs.


Goldstein had become the bank's shining star and highest-paid employee. Reliable sources estimated that his bonus for 1996 was approximately 15 million Swiss francs, or $11,481,000.

What happened at UBS is a complicated story involving power, ambition and vanity. It shows that risk management controls in the largest of the Swiss banks had not extended far enough. Although the bank suffered large losses in 1995, it did not learn enough from the experience. And the responsibility for the failure falls principally on Cabiallavetta.

Global ambitions

The story began in the wake of the bank's 1991 restructuring, when Cabiallavetta took over a new department—trading and risk management. Until then, he had been in charge of the foreign exchange business at UBS. Despite his promotion, Cabiallavetta knew he would need stellar results to reach the top management rank at the bank. The foreign exchange business he had managed until then had brought in a continuous flow of income, but great growth couldn't be expected from that area. Equity and fixed-income trading, the traditional brokerage function, was a more solid basis for power. But even this department was too small for Cabiallavetta, especially since margins were getting smaller. The private banking division, a worldwide symbol of Swiss banking, was much larger, and its director, Stephan Haeringer, was also ambitious. Urs Rinderknecht, the head of UBS's Swiss business, was also calculating his chances of succeeding Studer. To get to the top, Cabiallavetta realized he would need a real moneymaker: derivatives.

The immediate task was to put together the right kind of team. Cabiallavetta made Hans-Peter Bauer, a Swiss mathematician with a Ph.D. from the University of Zurich, head of the derivatives operation. This business encompassed three areas: foreign exchange, fixed income and equities. Establishing the foreign exchange sector was the easiest. This was a business with globally tradable currencies, without regional idiosyncrasies, and was, to a large extent, centrally managed. The foreign exchange derivatives business was given to Richard Silver, a trader in New York. He would, in the future, always bring in solid—although never enormous—profits. But while there were never problems, this was the smallest and least spectacular of the three businesses.

Fixed-income and equity derivatives were more complex. Each market had its eccentricities, and establishing a global operation would be an enormous challenge. For this reason, Cabiallavetta decided to focus on one area—equity derivatives—as the bank's first global business. This was the beginning of a special relationship between Mathis Cabiallavetta and Ramy Goldstein.

Up-and-comer

Goldstein had moved to the United States after his military service in Israel. After completing a doctorate in finance at Yale, he worked at Bell Laboratories. In terms of education, there are no parallels to Leeson, the Barings liquidator who had never attended university and who had received miserable grades in math. In 1987, Goldstein had moved to Credit Suisse First Boston in New York. Although he never had a senior management position there, he made good use of his technology background from Bell Labs. Goldstein was a typical arbitrage trader. He used hi€h-tech computer systemw to take advantage of price differentials in various markets.

In 1991, P erre de Weck, who was then head of UBS in New York, hired a team of 18 people from CSFB to establish an equity business in New York. Mark Suvall ran the team, and Goldstein made the switch to UBS as part of the group, although still without much leadership responsibility. He continued to specialize in arbitrage, but margins were narrowing.

An important undecided issue was who should run the global equity derivatives business. At a meeting in Zurich, it seemed Goldstein's time had come. His manner was brilliant, his arguments were clear, and he was aggressive and very professional. At the time, it wasn't Cabiallavetta who promoted Goldstein—Goldstein himself was so persuasive that he seemed to be the only one who had the right experience. But this turned out to be a mistake, since he didn't really have any experience with highly complicated market risks. He had been, simply, an arbitrage trader. But at that stage, who could have anticipated a problem? Nobody knew anything about the equity derivatives business. In addition, the bank didn't want to buy an entirely new trading system with its own risk control component, as its competitors had done. It wanted to keep control in its own hands.

So Goldstein received a mandate to establish an equity derivatives business and manage it globally. But there was one crucial problem: The bank was set up and organized regionally. Almost no other bank had cultivated such extensive “regional thinking,” and the most recent restructuring had only promoted that framework. Each of the four foreign regions—Europe, North America, Asia and Japan—was managed like a small independent bank. The regional CEOs, particularly Lim Ho Kee in Singapore and Markus Rohrbasser in New York, had pressed for independence. Then along came Goldstein, sent by Cabiallavetta, who wanted to take away a highly profitable portion of their business. They were extremely unhappy about this.


A risk manager in Singapore had an entirely different job description from his counterpart in Zurich. Uniformity—essential for a global enterprise system—did not exist at UBS.

The decentralization had disastrous consequences on two areas of the bank. The first was the bank's information systems. Each region had its own technology. Although UBS had the most solid information systems platform among the three big banks in Switzerland, its overseas systems were practically a jungle. There were plans for a systems unification, but these plans went nowhere. The transmission of e-mail from London to Tokyo, for instance, sometimes took up to 18 hours because of faulty connections. And when a client asked for a listing of all its derivatives positions in the wake of the 1994 Orange County bankruptcy, the list had to be generated and produced by hand.

Decentralization also had an effect on the bank's risk monitoring business. A risk manager in Singapore had an entirely different job description from his counterpart in Zurich, while the latter saw his job differently from someone in New York. Uniformity—essential for a global enterprise system—did not exist at UBS.

But Goldstein did not let these problems slow him down. He knew that no other U.S. investment bank would have given him a mandate to build an equity derivatives business from scratch. At UBS, he was essentially able to establish his own little bank within a bank, and become very rich in the process. He was highly motivated. He selected each of his colleagues (nearly 150 by the end of 1997) personally, dividing them up among all the large branches—London, New York, Zurich, Tokyo and Singapore. There was practically no turnover; Goldstein's group listened only to him. The equity derivatives unit was led by an internal management circle of about 10 people in London and New York. All of them were loyal to Goldstein, and he saw them as family. His leadership had a military aspect as well, which fascinated junior staff. “If the task had been, ‘Go rob a house,' no one would have been better than Ramy,” said someone who worked closely with him for a long time. “In short-term tactical operations, no one could beat him. He determined the tasks, spread out the responsibilities, and did a harsh reckoning after 10 days,” the colleague added. His staff rallied around this kind of efficiency. Goldstein had come from what seemed like an elite military troop and was building up a department that viewed itself as the bank's elite. Still, he was reserved outside his circle. He distanced himself from the bank's other departments, and he allowed no one outside his team to take part in his deals.

Ramy's way

Goldstein solved the two structural problems of decentralization—risk management and information systems—in his own way. Because he wanted to manage his department with little external interference, he installed his own risk management unit to estimate and control the risk on all deals in his department. The task for overseeing this fell on Alan Burstein, who had worked with Goldstein at CSFB. Burstein built a team of quantitative analysts and became, in a way, the brain behind Goldstein.

When it came to information systems, it was obvious that the chaos of UBS's systems had no place in Goldstein's global department. After convincing his bosses, Hans-Peter Bauer and Cabiallavetta, that he needed his own system, he introduced the Next computer system he had used at CSFB into the department. Goldstein was essentially building his own derivatives group, entirely independent of the bank yet with access to its capital. In Zurich, Bauer had two terminals on his desk—the bank's normal one and Goldstein's system. This was the gold mine that would catapult him and Cabiallavetta to the top.

They didn't have to wait long for success. In 1993, a record year, a third of the bank's trading division's income resulted from the derivatives business, with equity derivatives being clearly the biggest moneymakers. The profit from Goldstein's department was estimated at around 120 million Swiss francs. Goldstein and his traders had provided nearly 10 percent of the entire profit at the 28,000-person bank. He was an untouchable star. In November 1993, Cabiallavetta said to the press, “We believe that the successful implementation of UBS's strategy depends substantially on our market position in the area of derivatives.”

But the risk management issue was still unresolved, and after much back and forth and disagreement, one thing remained clear: The internal controls that Goldstein had established with Alan Burstein were not enough. A truly independent outside risk manager was necessary. Goldstein realized this. Moreover, regulatory authorities required external oversight. In the end, this was where the problems began. Cabiallavetta had handed over risk monitoring of his entire trading department to Werner Zimmermann, an old colleague from the foreign exchange side of the business. The fact that Zimmermann reported back to Cabiallavetta only duplicated Goldstein's problem at a higher level.


Cabiallavetta needed strong results to rise to the top of UBS but was, at the same time, responsible for risk control. An independent and effective risk management system was thus impossible.

Cabiallavetta needed strong results to rise to the top of UBS but was, at the same time, responsible for risk control. Like many traders, he had a conflict of interest. An independent and effective risk management system was thus impossible. U.S. investment banks would not have allowed such a structure to exist. Indeed, on multiple occasions in the months and years that followed, several high-ranking UBS managers reminded Cabiallavetta of this problem, but he never took action.

But there was still another problem. Zimmermann had joined the foreign exchange group in the early 1980s, when Cabiallavetta was a managing director in the group. Zimmermann's career had developed in Cabiallavetta's shadow, and the two men were quite close. Cabiallavetta had appointed Zimmermann risk manager of the foreign exchange business, but that was a relatively simple business, compared with Goldstein's highly complex deals. Cabiallavetta, moreover, accepted Goldstein's authority in his own area. So how could Zimmermann control Goldstein and his team effectively? This was a case of someone from the old trading school clashing with the younger technology-based generation.

This difference was enormous—and it was an obvious and open secret in Cabiallavetta's department. Although Zimmermann' s responsibility was to monitor the bank's entire trading business, he was ill-equipped to monitor Goldstein's global equity derivatives unit. In 1993, therefore, Cabiallavetta hired an experienced risk manager named Andrew Wright, who had spent eight years at Morgan Stanley.

Dire warnings

At this point, the most urgent problem became the information systems. Goldstein's department relied on its own system to such a large extent that risk management with the bank's standard systems was virtually impossible. So Wright installed his own system. This was, of course, a step forward, but as Goldstein's deals became more complex, Wright continued to remain a step behind the star trader. Wright voiced warnings more than once: In an environment with weak information systems, the chance of a risk management failure was greater than 70 percent, especially if Goldstein continued to venture into areas more and more difficult to oversee. But Cabiallavetta did not want to slow Goldstein down. He needed his profits, had great respect for his performance and trusted him. It was a classic conflict-of-interest case.

Wright also recognized another problem: How was he to monitor a global trading department in a regionally managed bank? Goldstein's team made deals in all the large branches of the bank—but again, there were no common systems. When Wright informed Cabiallavetta of this, he was told, “Then come to Zurich and build a unified information system.” At least in principle, Cabiallavetta was concerned with control, but the concern never bore fruit. Wright went to Zurich and in the following two years traveled around the world trying to establish common grounds for risk management.

In the meantime, Goldstein kept busy. Even though Zimmermann was still officially in charge of monitoring him, Bauer didn't think this was enough. He brought up the issue of Zimmermann's weaknesses with Cabiallavetta, but loyalty and faithfulness were extremely important to the latter, and Cabiallavetta didn't want to strip his old companion of power.

The risk management structure was also never really efficient. Bauer's risk managers and Zimmermann's were overlapping one another's work. And oversight was still not independent, since Zimmermann continued to report to Cabiallavetta, who thought more about profits than risk management. In memos and meetings, Wright continued to point out these organizational flaws. Cabiallavetta, Bauer and Goldstein all listened, but nothing happened.

Why didn't Cabiallavetta act on Wright's suggestions? One can only speculate. To begin with, he would have had to dethrone Zimmermann—and that was too harsh a step for him. He would also have suffered a loss of power if risk managers reported not to him but rather to an independent outsider. His dependence on Goldstein would also then have become painfully obvious to the bank's board.

Besides, Cabiallavetta knew that there was no one at UBS to whom an independent risk manager could have reported. Until July 1996, there was no chief financial officer—the position, in fact, did not exist. Cabiallavetta's personality may have played a role in this. Goldstein might have seen an external risk manager as a sign of mistrust from above, and therefore might not have taken it well. And Cabiallavetta had no intention of upsetting his superstar.

The structure of Cabiallavetta's organization wasn't unusual. Although all large U.S. investment banks had independent risk managers, many European banking houses were still organized as his was. Even his friend Marcel Ospel, who at the time ran the international operations of Swiss Bank Corp., had structured his department so the risk manager reported back to him and not to someone outside his department. At SBC this was called risk control. But there were two essential differences: Ospel had, in the person of Robert Gumerlock, a former O'Conner Partners man, one of the best risk managers in the field, and Zimmermann definitely wasn't in that league. But perhaps even more important, Gumerlock had access to the intimate details of his traders' deals.

That was exactly what was missing at UBS. Goldstein's belief in autonomy was accepted and encouraged at the top. Cabiallavetta refused to interfere in the work of his golden boy. “Cabiallavetta was always clearly on Goldstein's side,” Wright recalled in an interview this past April. “When somebody had an opinion that was different from Goldstein's, Cabiallavetta inevitably supported Goldstein.” There were numerous memos warning about Goldstein's autonomy. Rudi Muller, the long-time CEO (and ultimately chairman) of UBS in London, is said to have issued a number of warnings about Goldstein and his untamed autonomy. But Cabiallavetta didn't make any changes. “Goldstein is the bank's best manager,” he reportedly said on a trip to Asia. “Goldstein was a very professional guy,” he said again more recently. “I was very proud of him.”

There are parallels with Barings here—parallels that must have eventually become clear to Cabiallavetta. But in February 1995, when Barings declared bankruptcy, Cabiallavetta praised his bank's “independent risk management” on the Swiss program “10 to 10.” That, of course, was the crux of the problem—risk monitoring at UBS was not independent.

Trouble ahead

Accidents in any bank's development phase are normal, and there is probably no bank that hasn't suffered losses, but the crucial question is, What was learned as a result of those mistakes? For a well-organized bank, there are really only two options: Either it withdraws from the businesses it cannot control, or it drastically increases its risk management.


At the end of 1994, Cabiallavetta received a phone call from New York. “You guys are offering swaps here way below the market price,” warned a market participant.

Shake-up

Cabiallavetta realized his personal goal. On May 17, 1995, the executive board officially made him the new CEO of the bank. The derivatives business and Goldstein, his star trader, had played a significant role in his promotion. Goldstein was not modest about this. In various circles, he left no doubt about his importance: He considered it largely his doing that Cabiallavetta had risen all the way to the top.

One day before the public announcement of his promotion, Cabiallavetta appointed Werner Bonadurer as his successor, over Bauer. Bonadurer's nomination upset the fragile balance in the trading department. The department had been built and established by Cabiallavetta, and everyone accepted him as the boss. Bonadurer, on the other hand, had been chief of staff and continued to be seen, even after his promotion, as Cabiallavetta's assistant. “He never got away from his role as chief of staff,” a colleague remembered. “He constantly stuck his nose into everything and could not delegate.”

Bonadurer soon hired a new risk manager. It was Steven Schulman, someone Bauer had recruited from Merrill Lynch in early 1996 to inject more trading experience into the risk management group run by Degen, the mathematician. After Wright's departure in April 1997, Bonadurer named Schulman head of risk management for the trading group, and Zimmermann lost most of his power.

Schulman was one of the best risk managers in the business and, unlike Zimmermann, had the intellectual ability to control Goldstein and the other stars. But he reported back to Bonadurer—not to a truly independent manager outside the trading group. And Bonadurer did not really want to upset Goldstein since he relied on the profits he generated as well.

Silent angst

Goldstein felt exploited in a way that a bank outsider might have difficulty understanding. He earned more than anyone else at the bank but knew he would never receive recognition in the form of promotions. More than once, he said he felt he was a second-class citizen in the most Swiss of the three big Swiss banks. At CSFB, Allen Wheat, the architect of the bank's derivatives business, had become a member of the bank's senior management and eventually became CEO. At SBC, O'Connor derivatives pioneers David Solo and Andy Siciliano had been promoted to members of the board and received key positions in investment banking—Solo as COO and Siciliano as head of the worldwide interest rate and foreign-exchange business.

Goldstein, who had built a globally renowned equity derivatives business at UBS, wasn't rewarded with prestige. The bank still filled its top positions only with Swiss. So in his own way, he helped himself to a bigger title. On his card was printed the title vice chairman, which in Switzerland was equivalent to vice president of the board. But the title wasn't really his. The chairman of UBS London was Rudi Muller, and his vice chairmen were David Robins, CEO of European trading, and Hector Sants, head of equities in London. On several occasions, Sants asked Goldstein to remove the title from his card, but until the very end Goldstein was known in news articles as vice chairman.

Goldstein sought recognition in another way as well. Although his department was known in the bank for being secretive, he occasionally called journalists at publications such as the International Financing Review, the premier award-giver in the finance industry. Once a year, it hands out a coveted “House of the Year” prize in several categories. In 1996, UBS was crowned “Equity Derivatives House of the Year” and was praised in a three-page article as an “exceptionally focused operation.” “No one else has had the kind of profit growth we have had,” Goldstein remarked in the article. “We are a crucial part of the operative result of the bank.”


Goldstein made it immediately clear that he did not like Schulman's interference. Goldstein refused Schulman access to the innermost details of his deals.

The results were indeed impressive. In 1996, the profit from Goldstein's 140-person group came to about 270 million Swiss francs—15 percent of the profit earned by the other 28,000 people in the bank. Bonadurer's 4,000-employee trading division had a profit of 680 million Swiss francs. Goldstein's team, which constituted 3 percent of Bonadurer's division, had brought in 40 percent of the profit. And for that, Goldstein received a bonus of about 15 million Swiss francs ($11,481,000)—the highest bonus the bank had ever paid. This record bonus was determined by Bonadurer—but such a crucial decision was never made without first consulting Cabiallavetta.

Big money

At the start of 1997, the global equity derivatives group was the jewel in the UBS crown. The bank's annual report explicitly mentioned the “Equity Derivatives House of the Year” award and noted that 58 percent of its equity trading income came from the derivatives business. At a press conference in February 1997, Cabiallavetta once more reiterated the importance of the derivatives business: “There's nothing to get out of the normal brokerage business anymore. We must continue to support derivatives and proprietary trading. The income from derivatives far exceeds 50 percent of our gross profit.”

Goldstein was at the height of his career, and this gave him more power to defend his business from interference. He didn't show up for daily morning meetings in which the bank's division managers issued short reports. He continued to defend his department from a merger with the equity business, which had happened in the interest rate and foreign-exchange departments. And when Bauer tried to convince Goldstein to give up his computer system and join the bank's common technology platform, Goldstein again insisted on autonomy.

The arrogance of members of his department also increased. They saw themselves as the elite of the bank, and they made this clear to everyone else. “Goldstein was practically untouchable—a typical big swinging dick,” colleagues told one another. Put another way, he was someone who knew no one could harm him. This attitude was tolerated at the very top. Ulrich Grete, the head of information technology and human resources (and a member of the executive board) had personally made sure that Goldstein's top people were given access to their computer system from their homes.

So what could still motivate Goldstein? He was blocked from ascending the bank's career ladder. Was it simply money that drove him? This much was certain: No other bank in London was taking such high risks in the derivatives business—and with such poor risk management controls. In the best of times, the risk would bring Goldstein great profits and a nice bonus; in the worst of times, the risk would create huge losses and cost him his job. But he could live with that. After all, he had no chance of rising in the bank, and his bonus was secure.

Brave and daring

Just how risky the deals were in which UBS had gotten itself entangled did not surface until SBC took over Goldstein's department in December 1997. Specialists needed several weeks to analyze what Goldstein's team had done. What whs interesting was that SBC—which had acquired the world's best derivatives know-how froÌ O'Connor Partners in the early 1990s—had never dared enter into the kind of deals Goldstein was doing. SBC had strict limits on the kinds of deals that were acceptable and the kinds that weren't. When a deal did not fit the bank's risk management system, the SBC people turned it down. Things were different at UBS. There was no common system. Each department decided for itself which deals to do.

Goldstein's department, for example, wrote many long-dated options—some longer than five years—which were difficult to calculate even with the most complex models. It was just like the weather—after three days, so many variables come into play that an exact forecast is next to impossible. Yet the profit from the sale of these options could often be instantly realized, and that's what appealed to Goldstein's department. UBS was the absolute leader in the London market for long-dated equity options/ Its main competitors were the British houses NatWest and BZW—two houses that ended their investment banking operations in 1997. Conservative banks did not dare touch this field. SBC, for example, wrote no options longer than one year.


Goldstein, Bauer and Bonadurer watched as new losses mounted every day. On one day, it was 5 million Swiss francs; on another, 20 million Swiss francs. And there was no end in sight.

The sky falls

It suddenly it became apparent that Goldsein had overreached his limits. It all began harmlessly. The new Labor government in England had created a new law for the taxation of dividends, which took effect on July"2, 1997—one day alter Cabiallavetta had broken off merger negotiations with SBC. Banks, which previously calculated a certain dividend value into their option prices, now had to calculate smaller dividends. This applied in particular to banks that had written long-dated options, and in this area UBS had the greatest market share. SBC suffered few losses under the new law. Goldstein warned Bauer that he would suffer losses of 100 million Swiss francs because of the tax change and another 100 million Swiss francs because of a mistake in his model. That, at any rate, was the bank's official version. For the first time, Bonadurer had to go to Cabiallavetta with bad news from Goldstein. But both of these losses were still relatively small and could be written off in seconds.

It was a different case with the convertible bonds from Japanese banks that Goldstein's department had bought in large quantities in New York in 1996. Goldstein had already made a great deal of money on convertible bonds in European countries in 1995. The procedure was always the same: The bond piece was sold off and the bank retained the option to buy the stock. And Goldstein's group immediately entered the profits in its books on options with five-year expiries.

The crisis in Japan began soon after the bank digested the two earlier losses in London. In August, Japanese bank stocks fell dramatically, and by the end of 1996 they were down 70 percent. Panic broke out in Goldstein's department. Suddenly, Goldstein was all too human—and it soon became apparent that he did not have much experience with market risks. Apfel, his head trader, was at the end of his rope and slept only two hours a night. As the bank stocks declined, the point at which the individual options would plummet approached. The traders sold as many stocks as possible, but the continuous sell-off of the bank's huge inventory only lowered the prices even more. Hedging was almost impossible.

A slow deterioration process began. Goldstein, Bauer and Bonadurer, who had already been badly hurt by the losses of the summer, watched as new losses mounted every day. On one day, it was 5 million Swiss francs; on another, 20 million Swiss francs. And there was no end in sight. Bonadurer was under intense pressure—as was Cabiallavetta, who had hired him. By September 1997, the month in which UBS began reconsidering a merger with SBC, the hole of “unknown, but possibly huge, proportions” was developing in the department Cabiallavetta had built and established.

Japanese bank stocks reached their lowest point in mid-November, following the bankruptcy of Yamaichi Securities. In early November, Bonadurer had withdrawn responsibility for hedging the bank's position from Goldstein's team and had given it to Andrew Rodman, the head of proprietary trading at the bank. In mid-November, the bank announced the dismissal of Goldstein and his three top traders—Apfel, Thalheim and Alan Burstein. In mid-December, Hans-Peter Bauer left the bank.

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