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UBS to pay $1.5 billion in Libor settlement

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UBS slapped with $1.5 billion in fines 03:16

Story highlights

  • UBS has agreed to pay $1.5 billion to U.S., UK and Swiss regulators over its role in the Libor scandal
  • UBS is the second bank after Barclays to settle with regulators over Libor
  • It was the first bank to disclose it was under investigation for manipulation of the interbank lending rate
  • The Libor probe has so far drawn in over a dozen banks on three continents

UBS has agreed to pay $1.5 billion to US, UK and Swiss regulators as part of a global settlement over allegations that it tried to manipulate Libor interest rates.

As part of the settlement, the Swiss bank's Japanese unit agreed to enter a plea of one count of wire fraud related to the rigging of various rates, including Yen Libor.

UBS is the second bank to settle with regulators over the Libor scandal. In March 2011, it became the first bank to disclose it was under investigation for attempted manipulation of the London Interbank Offered Rate (Libor) which is used to price more than $350tn in contracts worldwide.

In June, Barclays agreed to pay £290m to US and UK regulators over its role in the Libor scandal. The resulting furore cost Barclays its chief executive and chairman, and sparked wholesale reform of the way Libor is set.

As part of Wednesday's settlement, Finma, the Swiss regulator, ordered UBS to disgorge SFr59m of profits for its role in the manipulation of Libor.

Finma found that UBS traders "made numerous requests asking bank employees responsible for submitting interest rates to submit higher or lower values" between 2006 and 2010, in an effort to "influence submissions in such a way as to benefit UBS proprietary trading positions".

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    Finma also found that some UBS managers had urged employees to submit rates that would "positively influence the perception of UBS's creditworthiness" between 2007 and 2008. The regulator said numerous employees and a limited number of managers were involved.

    The Libor probe has drawn in over a dozen banks on three continents. Last week, three men, including a former UBS trader, were arrested and bailed without charge pending further investigation. Several former UBS employees have been notified by the UK Financial Services Authority that they are personally under investigation.

    Wednesday's settlement caps a tumultuous few months for Switzerland's largest bank and its relatively new leadership team of Sergio Ermotti, chief executive, and Axel Weber, chairman.

    In November, UBS was fined £29.7m by Britain's Financial Services Authority for control failures that allowed rogue trader Kweku Adoboli to take positions that cost the bank $2.3bn in 2011 and Oswald Grübel, then chief executive, his job.

    The previous month, UBS announced a SFr2.2bn third-quarter loss as Mr Ermotti unveiled a plan to cut its investment banking operations in half. He said UBS would shed 10,000 jobs and refocus on its more lucrative wealth management operations.

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