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UBS fined US$1.5b over rate-rigging issue
Source: Agencies |
December 20, 2012, Thursday
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SWITZERLAND'S UBS AG agreed yesterday to pay some US$1.5 billion in fines to international regulators following a probe into the rigging of a key global interest rate.
In admitting to fraud, Switzerland's largest bank became the second bank, after Britain's Barclays Plc, to settle over the rate-rigging scandal.
The fine, which will be paid to authorities in the United States, Britain and Switzerland, also comes just more than a week after HSBC Plc agreed to pay nearly US$2 billion for alleged money laundering.
The settlement caps a tough year for UBS and the reputation of the worldwide banking industry. As well as being ensnared in the industry-wide investigation into alleged manipulations of the benchmark LIBOR interest rate, short for London interbank offered rate, UBS has seen its reputation suffer in a London trial into a multibillion dollar trading scandal and ongoing tax evasion investigations.
As a result of the fines, litigation, unwinding of real estate investments, restructuring and other costs, Zurich-based UBS said it expects to make a fourth-quarter net loss of between 2 billion and 2.5 billion Swiss francs (US$$2.2 billion and US$2.7 billion).
LIBOR, which is a self-policing system and relies on information that global banks submit to a British banking authority, is important because it is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.
UBS characterized the probes as "industry-wide investigations into the setting of certain benchmark rates across a range of currencies."
The UBS penalty is more than triple the US$450 million in fines imposed by American and British regulators in June on Barclays for submitting false information between 2005 and 2009 to manipulate the LIBOR rates.
Those fines exposed a scandal that led to the departure of CEO Bob Diamond and the announcement that Chairman Marcus Agius would step down at the end of the year.
In accepting the fines, UBS said some of its employees tried to rig the LIBOR rate in several currencies, but that its Japan unit, where much of the manipulation took place, entered a plea to one count of wire fraud in a deal with the US Justice Department.
UBS said some of its personnel had "engaged in efforts to manipulate submissions for certain benchmark rates to benefit trading positions" and that some employees had "colluded with employees at other banks and cash brokers to influence certain benchmark rates to benefit their trading positions."
In admitting to fraud, Switzerland's largest bank became the second bank, after Britain's Barclays Plc, to settle over the rate-rigging scandal.
The fine, which will be paid to authorities in the United States, Britain and Switzerland, also comes just more than a week after HSBC Plc agreed to pay nearly US$2 billion for alleged money laundering.
The settlement caps a tough year for UBS and the reputation of the worldwide banking industry. As well as being ensnared in the industry-wide investigation into alleged manipulations of the benchmark LIBOR interest rate, short for London interbank offered rate, UBS has seen its reputation suffer in a London trial into a multibillion dollar trading scandal and ongoing tax evasion investigations.
As a result of the fines, litigation, unwinding of real estate investments, restructuring and other costs, Zurich-based UBS said it expects to make a fourth-quarter net loss of between 2 billion and 2.5 billion Swiss francs (US$$2.2 billion and US$2.7 billion).
LIBOR, which is a self-policing system and relies on information that global banks submit to a British banking authority, is important because it is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.
UBS characterized the probes as "industry-wide investigations into the setting of certain benchmark rates across a range of currencies."
The UBS penalty is more than triple the US$450 million in fines imposed by American and British regulators in June on Barclays for submitting false information between 2005 and 2009 to manipulate the LIBOR rates.
Those fines exposed a scandal that led to the departure of CEO Bob Diamond and the announcement that Chairman Marcus Agius would step down at the end of the year.
In accepting the fines, UBS said some of its employees tried to rig the LIBOR rate in several currencies, but that its Japan unit, where much of the manipulation took place, entered a plea to one count of wire fraud in a deal with the US Justice Department.
UBS said some of its personnel had "engaged in efforts to manipulate submissions for certain benchmark rates to benefit trading positions" and that some employees had "colluded with employees at other banks and cash brokers to influence certain benchmark rates to benefit their trading positions."
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