UBS feels $1.5b wrath of regulators
THE Swiss-based investment bank UBS must pay about $US1.5 billion to US, British and Swiss regulators for trying to rig global interest rates.
This is triple the penalties levied against the UK bank Barclays. Fines from the US Commodity Futures Trading Commission and the US Department of Justice total $US1.2 billion.
The bank will pay £160 million ($266 million) to the UK Financial Services Authority, the largest fine imposed by the regulator, and disgorge 59 million Swiss francs ($61 million) in profits to the Swiss Financial Market Supervisory Authority.
"Clearly, this chapter isn't positive," UBS chief executive Sergio Ermotti said. About 40 people had left the bank as a result of the investigations, Mr Ermotti said, adding that the behaviour of certain employees was "unacceptable". Global authorities are investigating claims that more than a dozen banks altered submissions used to set benchmarks, such as the London interbank offered rate, to profit from bets on interest rate derivatives or make the lenders' finances appear healthier.
Barclays agreed to pay £290 million in June to resolve the US and UK Libor probes.
The UK finance regulator found more than 2000 documented requests by UBS traders to manipulate rates in chat messages and group emails, and that at least 45 people at the bank knew about it over six years until the end of 2010.
Bank employees colluded with interdealer brokers and paid them bribes to help manipulate yen Libor submissions by other banks, the FSA said.
"UBS' misconduct was all the more serious because of the orchestrated attempts to manipulate the yen Libor submissions of other banks, as well as its own and the collusion with interdealer brokers and other panel banks," FSA director of financial crime Tracey McDermott said.
UBS' unit in Japan agreed to plead guilty to one count of wire fraud in relation to the manipulation of benchmark rates, including yen Libor, the company said.
The penalty is another blemish on UBS, which is scaling back its investment bank to concentrate on wealth management.
UBS said in October it might post a loss for 2012.
UBS was fined £29.7 million last month by the FSA and told by the Swiss regulator it might have to increase capital levels for operational risks after a loss from unauthorised trading by Kweku Adoboli.
The former trader in UBS' London office was jailed on November 20 for fraud in relation to the loss, the largest from unauthorised trading in British history.