(Bloomberg) -- Kweku Adoboli's co-workers knew he was making fictitious trades, the former UBS AG banker told an attorney who interviewed him on the night of his arrest in September 2011.

Adoboli told Damien Byrne Hill, a lawyer at Herbert Smith LLP who represented the Swiss bank, that his colleagues on the exchange-traded funds were aware of fictitious trades from May, though they didn't know the extent of his positions.

Hill's notes from the interview with Adoboli, read out by a prosecutor at the former trader's fraud trial in London today, indicated that while his colleagues were "unhappy" about the trades, they didn't alert managers.

"I f----d up," Adoboli said he told the other traders, according to the lawyer's notes. "I'm trying to make it a bit better."

Adoboli, 32, is charged with fraud and false accounting over unauthorized trades on which UBS lost $2.3 billion. The former trader admitted in September 2011 to risking $5 billion on Standard & Poor's 500 futures and a further $3.75 billion in the German futures market shortly before he was arrested in September last year, another former manager testified.

Hill's notes indicated Adoboli admitted building up positions of as much as $10 billion by August 2011 and masking them with fictitious ETF trades. When other traders noticed Adoboli was stressed, Adoboli told them it was a result of splitting up with his girlfriend, according to Hill's notes.

Gruebel Risk

Phil Allison, UBS AG's head of global cash equities, testified earlier today that there was "a change of ethos" under former Chief Executive Officer Oswald Gruebel that encouraged more risk taking at the bank. The former CEO pushed for more proprietary trading and more risk to increase profits.

"If a bank doesn't take any risk, it is incredibly hard to make money, and that is our job," Allison said. Gruebel thought "there was room for more market risk, which in general was a view I agreed with."

Gruebel stepped down after the loss the bank attributed to Adoboli.

Allison said he has spent "sleepless nights" thinking about whether missed red flags that Adoboli may have been placing unauthorized trades.

"We felt we were putting two intelligent individuals in the center of the floor" when the bank put Adoboli and his former colleague John Hughes in charge of the exchange-traded funds desk, Allison said. "It is not one where I've thought, 'Gosh, that's something I should've done differently.'"

Allison said he wished that the bank had "clearly written and documented" their risk limits.

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