The alleged crime comes 13 years after UBS was hit by a rogue trading scandal which amounted to losses of $625 million in its derivatives trading arm. At the time, the bank assured critics it had "taken note of its weak spots." 

Today, the bank's emphasis on cross-collaboration between its investment banking and wealth management units - one of its most prized initiatives - could be its next weak spot, according to David Scott, former UBS private banker who three years ago left to start boutique London-based manager Vestra Wealth. 

Scott, who founded Vestra with 72 ex-UBS and other staff in the summer of 2008, said the claims of misbehaviour by the UBS trader demonstrates the dangers facing private clients where wealth management sits alongside investment banking. 

“Private clients are simply not aware of the implicit risks inherent within the business model of these organisations,” according to a statement issued by Vestra last Friday.

“Wealth management should be concerned with the long term prudent preservation of client's assets, in stark contrast to the high risk and volatility of investment banking,” Vestra said.

“The apparent failure of the bank's control systems in this instance is a real worry to clients as such a failure could severely damage the stability of the bank. This is a further example of the benefits of some of the ring fencing proposed by the recent Vickers report,” it continued, referring to the Independent Commission on Banking’s report.

UBS did not reply to a request from this publication seeking comment about Scott’s remarks.

Last week, London police arrested Kweku Adoboli, 31, after he disclosed his actions to colleagues. He has been charged in a London court with fraud by abuse of position and false accounting.

The disclosure of the trading losses at the Zurich-listed bank is the latest setback for UBS. Having endured net outflows after the 2008 credit crisis and being hit with massive fines from the US authorities for helping clients evade taxes, it has since been forced to reveal the names of over 5,000 clients. It is currently embroiled in a number of lawsuit from clients and firms in the US who lost money. Last month it announced 3,500 job losses off the back of poor trading figures. 

But since the appointment of chief executive Oswald Grubel in 2009 to "stop the rot", the bank had seen its fortunes begin to recover. Its wealth management arm enjoyed a rise in revenues in all regions. The bank has moved to put its asset management, investment banking and wealth management divisions in to more separate structures, although it has held back from creating completely separate corporate structures. 

Cross Collaboration In Action

A number of private banking operations, such as at Citigroup and Credit Suisse, are part of larger parent firms that also undertake investment banking. In the case of Credit Suisse, for example, the firm actually stresses the benefits of close collaboration between the private bank and the investment bank, referring to it as its "one bank" model.

Many banks in Asia cite the importance of cross collaboration due to the region's high proportion of entrepreneurs. Tan Su Shan, the head of wealth management at Singapore's DBS Bank told WealthBriefingAsia in an interview last month that what she calls "the wealth continuum" - a holistic model linking management and different silos across the bank - is key to DBS' success. 

Likewise Shayne Nelson, chief executive of Standard Chartered Private Bank, said that cross-collaboration between the corporate and private parts of the bank was important for future growth. 

More so than in other regions, a high proportion of HNW individuals in Asia are entrepreneurs rather than wealth inheritors, which drives the business strategy of any private bank that wants to be successful there, Nelson said. He said 63 per cent of Asian high net worth individuals own their own business, which is higher than the global average.

“The mix between corporate and personal money is a very blurry line with many individuals in Asia,” he said. 

Rogue Trading In Asia

Other notable examples of rogue trading include when France's Société Générale was hit by rogue dealer, Jerome Kerviel, three years ago. He was arrested over unauthorised trades in 2008 which cost the bank €4.9 billion. 

But while most recent instances have taken place in the West, banks in Asia-Pacific have had their fair share of rogue traders too. In 2004 National Bank of Australia discovered a $370 million loss due to unauthorised spot trades on its foreign currency options desk. Two traders were subsequently jailed. 

In 1996 chief trader Yasuo Hamanaka racked up losses of $2.6 billion at Japan's Sumitomo Corporation on unauthorised copper trades. The previous year, Daiwa Bank suffered a $1.1 billion loss in its American treasury bond trading arm as a result of unauthorised trades by Toshihide Iguchi. He served four years in prison.

In 1992, a number of Indian banks and brokers were accused of illegally conspiring to withdraw around $1.3 billion from the interbank securities market to bolster the Bombay Stock Exchange. Broker Harshad Mehta, one of the main culprits accused, reportedly died in jail during the trial.