Regulators in the UK and Switzerland will start enforcement actions against UBS for shortcomings that enabled a trader to make $2.3 billion in unauthorised trades last year, the Wall Street Journal reported, citing unnamed sources.

The loss, which had been disclosed by the UBS’s investment bank at a time when the Swiss firm had seen a recovery in its fortunes after the 2008 credit crunch, led to the resignation of then-chief executive Oswald Grübel, to be eventually replaced by senior UBS manager Sergio Ermotti.

UBS has completed its own internal investigation. The Financial Services Authority – the UK regulator - and the Swiss Financial Market Supervisory Authority are continuing to investigate the matter.

The bank issues full-year earnings figures on 7 February. It declined to comment when contacted by WealthBriefing about the enforcement actions reports of the WSJ.

The report said the proceeding is expected to result in regulators penalizing the bank for gaps in oversight. The regulators' investigation is expected to be completed by mid-February, although it could take far longer for them to move forward with enforcement action.

While the FSA has the power to fine a bank in the case of lapses in its risk-control systems, the Swiss regulator does not, the report said. Instead, the Swiss agency can force a bank to make personnel changes, among other measures.

London police charged Kweko Adoboli, the trader arrested in the matter, with fraud and false accounting. Appearing in a London court today, he denied the charges.

The bank hasn't disclosed the full results of its own investigation because it doesn't want to compromise the London police probe, the publication said.