UBS rogue trader who gambled away £1.4billion in biggest-ever City fraud 'believed he had the magic touch' as he tried to boost his ego and bonus.

But prosecutors claim Adoboli failed to hedge several of his investments in order to make a bigger profit and larger bonus for himself.

Ms Wass said: 'When you put your life savings in a pension fund you do not expect an investment banker to gamble it on the toss of a coin. You expect him to limit the downside and maximise the growth of the investment for your old age.'

She said there was a 'fundamental difference' between a gambler and an investment banker.

'A gambler takes uncertain risks playing games of chance risking all, whereas an investment banker is investing money or making trades taking extreme care to reduce his risk as much as possible by insuring or hedging against loss when a price falls.

'The gambler relies on chance, he wins or he loses. The investment bank trader is investing to make his bank's or his clients' investments grow and he goes to great lengths to ensure that he cannot lose all or even a substantial amount of his investor's stake.

'One is trying to protect and increase wealth on behalf of others, and the other is relying on good fortune with no investment element, with absolutely no insurance.'

She said Adoboli fell into a 'gambling mindset' - describing a martingale system that involves doubling a bet after each loss to try and recoup the all the money. 

She added: 'It takes very deep pockets to continue to run such a system: pockets the size of the UBS bank. It is these pockets, these resources that Mr Adoboli was using to back his bets.

'He was certain his prediction of the way the market was moving was correct and when the market moved in the opposite way and his bets lost, he simply increased his bets.

'Given the size of the unhedged bets that Mr Adoboli was undertaking, the doubling of the sums necessary to recover, the losses he was making very rapidly reached into the billions.'

She said at one stage he was at risk of losing the bank nearly 12 billion US dollars of unhedged investments.

‘He was lying to the bank, both to his senior managers, his risk control department, and the accounts department.

‘In effect he was risking the very existence of the bank by gambling its resources, ultimately for his own benefit.

‘Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler. He had become what is sometimes referred to as a rogue trader.’

But she claimed he had gone beyond the behaviour of a ‘mere rogue trader -  faking records over a two and a half year period.

Initially, the court heard he had been getting some success and was getting away with it but then 'his system crashed like a car hitting a wall at high speed' and he was forced to admit what he had been doing.

Ms Wass continued: ‘He faked bookings, he created false accounts and conducted himself as a master fraudster, deliberately and systematically deceiving and defrauding the bank which was employing him.

‘As Mr Adoboli was later to admit, he had been cooking the books and deceiving the bank since 2008: two and a half years before he was caught.’

The public school-educated former head boy worked his way up from a graduate job at the bank that he started in 2003.

He became a trader in December 2005, was promoted to associate director in March 2008 and then director in March 2010.

Moving into trading meant he had the chance to earn million-pound bonuses, Ms Wass said, and his salary rose 'dramatically' as his career progressed. 

In 2007 he earned £40,000 and a bonus of £55,000, in 2008 he earned £50,000 and a bonus of £15,000.

Then in 2009 he earned £100,000 with a £95,000 bonus; then in 2010 his salary was £110,000 and his bonus was £250,000.

The rise in the final two years was because he had begun to 'fraudulently gamble the bank's money', jurors were told.

The trial continues.

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