Ttrader Kweku Adoboli has appeared in court in  London charged with fraud in connection with a €1.45 billion loss at Swiss bank UBS.

Mr Adoboli (31), who was a UBS director of exchange traded funds, appeared before City of London Magistrates Court.

He was formally accused of two counts of false accounting, one of which dated back to 2008, and one count of fraud by abuse of position. The court ordered him to be detained until a further hearing next week.

Wearing a light blue sweater and a white shirt, he wiped away tears as he appeared before City of London Magistrates Court.

He spoke only to confirm his name and address as he was remanded in custody until September 22nd when he will appear again in the same court.

"This is to allow you to make a bail application," said magistrate Carolyn Wagstaff. "They are extremely serious charges."

Mr Adoboli will face a further committal hearing for his case to be transferred to a higher court on October 28th.

He worked on the bank's Delta One desk and was arrested in London yesterday after the bank said unauthorised trades caused a $2 billion (€1.45 billion) loss.  He worked for a unit of UBS's investment bank that handles trades for clients, typically helping them to speculate on or hedge the performance of a basket of securities. It also takes risks with the bank's own money in arranging trades.

Mr Adoboli has hired lawyers at Kingsley Napley in London, the firm that previously advised Nick Leeson, to represent him.

Kingsley Napley spokeswoman Louise Beeson said she couldn't comment on the specifics of the case.

The firm advised Mr Leeson, a former derivatives trader, after he caused the collapse of Barings with $1.4 billion in losses in 1995. Mr Leeson was sentenced to prison about 10 months after his crime was uncovered. He was freed from a Singapore jail after serving two-thirds of his six-and-a-half year sentence for fraud and forgery.

Kingsley Napley is also advising Rebekah Brooks, the former chief executive officer of News Corp's News International unit, in the phone-hacking scandal, and Vincent Tchenguiz, the real estate investor arrested by the UK's Serious Fraud Office in March as part of an investigation into the collapse of the Icelandic bank Kaupthing Bank. The firm also advised the deceased general Augusto Pinochet, the former dictator of Chile.

UBS said it was facing a loss in the third quarter as a result of what it described as “unauthorised trading”. No client money was involved, it said in a statement.

The trading could be the third largest such fraud in banking history, after a 2008 incident cost Société Générale €4.9 billion and a $2.6 billion loss at Sumitomo in 1996.

"We understand that you have already had to contend with unfavourable, volatile markets for some time now," Oswald Grübel, UBS's chief executive, said in a memo to employees. "While the news is distressing, it will not change the fundamental strength of our firm."

Once a pillar of Swiss financial stability, the reputation of UBS has taken a severe beating since it ran up €50 billion losses in the US subprime crisis, prompting a state bailout. Before news the bank's shares had lost 85 per cent of their value in the last five years, forcing drastic cost-cutting measures and 3,500 job losses.

The revelation came as the Swiss parliament was scheduled to debate tougher bank supervision laws, forcing domestic banks to cut risk and maintain capital reserves worth 19 per cent of their assets – almost double the level in the EU.

"This just shows that investment banking is a high-risk area," said Caspar Baader of the Swiss People's Party (SVP). "It's important that we separate clearly systemically important functions from the rest of the banking business."

Marianne Binder of the Christian Democrats said it proved the case for higher capital requirements. "Apparently security systems can fail, again and again."

The revelation that a trader in "Delta One", an area of derivative trading activity that is one of the only remaining ways for banks to take bets with their own money, could cause such a catastrophic loss has prompted calls for fresh restrictions on investment banks.

Additional reporting: Agencies