UBS Agrees to Pay $1.5 Billion for Manipulating Libor
Swiss banking giant UBS has agreed to pay around $1.5 billion to British, U.S. and Swiss regulators to settle allegations it manipulated Libor interest rates, it said in a statement Wednesday.
"UBS agrees to pay approximately CHF 1.4 billion in fines and disgorgement to U.S., UK and Swiss authorities to resolve LIBOR-related investigations," the statement said.
Switzerland's largest bank will pay more three times the amount of the settlement reached in June with Britain's Barclays, another one of the more than dozen banks investigated for trying to rig gloval interest rates.
As part of the one of the biggest fines ever slapped on a financial institution, the Swiss bank said it had agreed to pay £160 million ($260 million) in fines to the UK Financial Services Authority.
It will pay 59 million Swiss francs ($64 million) as disgorgement of estimated profits to the Swiss Financial Market Supervisory Authority (FINMA).
It also said it had agreed to payment schedules for a total of $1.2 billion to the US Department of Justice and the Commodity Futures Trading Commission (CFTC).
The bank said the settlement would affect its fourth quarter results.
"UBS believes its fourth quarter net profit attributable to shareholders will show a loss, primarily as a result of provisions for litigation and regulatory matters," the statement said.
UBS was the first bank to reveal problems in the rate-setting process of the Libor, an acronym for London Interbank Offered Rate, which estimates the rates at which banks lend money to each other and also affects a vast range of contracts around the world.
"During the course of these investigations, we discovered behavior of certain employees that is unacceptable," UBS chief executive Sergio Ermotti said in the statement.
"Their misconduct does not reflect the values of UBS nor the high ethical standards to which we hold every employee.
"We have cooperated fully with the authorities and taken decisive and appropriate actions to correct the issues and to strengthen our control processes and procedures," Ermotti said.
"We deeply regret this inappropriate and unethical behavior. No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity."
Other banks are also reportedly in advanced talks with regulators about settling allegations that they too manipulated their Libor information, including Royal Bank of Scotland and Deutsche Bank.
UBS said its Japanese subsidiary would plead guilty to a U.S. criminal offence as part of the investigations.
"As part of a proposed agreement with the U.S. Department of Justice, UBS Securities Japan Co. Ltd. (UBSSJ) has agreed to enter a plea to one count of wire fraud relating to the manipulation of certain benchmark interest rates, including Yen LIBOR," it said.
Source: Agence France Presse
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