Police in London’s financial district have arrested a 31-year-old man in connection with a massive loss reported by Swiss bank UBS.

City of London police said the man was arrested at 3.30 a.m. on Thursday on suspicion of fraud by abuse of position. His name was not released.

UBS said earlier Thursday that a rogue trader caused it an estimated loss of $2 billion, and warned that it could report a loss for the entire third quarter as a result.

UBS said it discovered that unauthorised trading by one of its staff has caused an estimated loss of $2 billion, and warned it could result in a loss for the entire third quarter.

The announcement caused UBS shares to plummet in early trading on the Zurich exchange.

The Zurich-based bank provided little information on the incident, saying it was still under investigation. But it said no customer money was affected.

“UBS has discovered a loss due to unauthorized trading by a trader in its investment bank,” it said.

“UBS’s current estimate of the loss on the trades is in the range of $2 billion,” the bank said. “It is possible that this could lead UBS to report a loss for the third quarter of 2011.”

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