UBS to pay $1.5 billion in fines over LIBOR rate scandal
The Swiss bank agreed to the fine Wednesday, settling with US, British, and Swiss regulators. In the case, UBS employees tried to rig the London Interback Offered Rate, or LIBOR, using different currencies.
Swiss bank UBS agreed Wednesday to pay $1.5 billion in fines for trying to manipulate a key interest rate that affects borrowers around the world.Skip to next paragraph
Subscribe Today to the Monitor
The settlement with U.S., British and Swiss regulators caps a tough year for the company and the reputation of the global banking industry. The fine on UBS, which will also see two former traders charged with conspiracy, is triple the amount that British bank Barclays PLC agreed to pay in June to settle similar charges.
RECOMMENDED: Five ways big banks' Libor scandal affects you
UBS, Switzerland's largest bank, said some of its employees tried to rig the LIBOR rate — short for London Interbank Offered Rate — in several currencies. The rate is set daily using information that banks provide and is used to price trillions of dollars in contracts around the world, including mortgages and credit cards.
Some UBS traders voluntarily submitted — or pressured others to submit — inaccurate data to gain some financial advantage.
The Justice Department said two former UBS senior traders, Tom Alexander William Hayes, 33, of Britain, and Roger Darin, 41, of Switzerland, will be charged with conspiracy, while Hayes also will be charged with wire fraud in New York federal court. Justice Department officials said they believed the two men were in Britain and Switzerland, and would be seeking their extradition.
UBS will pay $1.2 billion of its fine to the Justice Department and U.S. Commodity Futures Trading Commission. The CFTC will get $700 million, the largest fine it ever ordered. The remaining $300 million will go to regulators in Britain and Switzerland.
As a result of the fines, litigation, unwinding of real estate investments, restructuring and other costs, UBS said it expects to lose between 2 billion and 2.5 billion Swiss francs ($2.2 billion to $2.7 billion) in the fourth quarter. Nevertheless, the Zurich-based bank maintained that it "remains one of the best capitalized banks in the world."
UBS shares closed down 0.3 percent at 15.20 francs on the Zurich exchange.
The LIBOR scandal is likely to make headlines again in coming months. Other big global banks are also being investigated for rigging the same market and are expected to be fined.
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."