ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for alerts Register for real-time alerts, custom portfolio, and market movers

Swiss bank UBS fined $1.5bn for Libor manipulation

Share On Facebook
share on Linkedin
Print

The Swiss bank UBS has agreed to pay $1.5bn (£940m) to US, UK and Swiss regulators for attempting to manipulate the Libor inter-bank lending rate. It is the second major bank to be fined over Libor after Barclays’ was ordered to pay £290m to UK and US authorities in the summer, where CEO Bob Diamond and Chairman Marcus Agius were forced to resign.

Libor tracks the average rate at which international banks based in London lend money one to each other and it is used to price more than $350tn in contracts worldwide. Banks manipulated it to borrow money at a cheaper rate and then lend it at a higher cost to make extensive profits.

The UK’s Financial Services Authority (FSA) found that between 2005 and 2010 “the widespread and routine nature” of attempts to manipulate rates and control failures meant that “every Libor and Euribor submission in currencies and tenors in which UBS traded is at risk of having been improperly influenced”.

“At least 2,000 requests for inappropriate submissions were documented – an unquantifiable number of oral requests, which by their nature would not be documented, were also made” the FSA continued. “Manipulation was also discussed in internal open chat forums and group emails, and was widely known.”

UBS will pay a record £160m to the FSA (Barclay’s paid £59m) and $1.2bn to the US Department of Justice and Commodity Futures Trading Commission. The bank will also move 59m Swiss francs in profits to FINMA, the Swiss regulator.

“What may be most significant in UBS’s case” wrote Robert Peston, the BBC Business editor, on the BBC website “is that Swiss regulators at FINMA have proved that it profited from the market manipulation – which increases the risk that it may be forced to pay damages in civil litigation to customers on the wrong end of rigged interest rates. The point is that when Barclays was punished, regulators were unable to demonstrate that it had actually made a profit from Libor rigging.”

UBS admitted two kinds of Libor manipulation. The first to make profits on derivatives moving the rate up and down; the second to minimize its borrowing rates during the financial crisis to make the bank appear stronger. According to the FSA, at least 45 UBS traders, managers and senior managers were involved in it, and they were “colluded with inter-dealer brokers in co-ordinated attempts to influence Japanese yen Libor submissions made by other banks”. It is actually the first time that traders have been accused to profit depending on what they submit and take payments to help with manipulation.

“We deeply regret this inappropriate and unethical behaviour,” said Sergio Ermotti, UBS chief executive. “No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity.”

The Libor probe involves more than a dozen banks on three continents. Last week, three men, including a former UBS trader, were arrested in the UK and bailed without charge pending further investigation.

UBS said the fines will result in the bank recording a loss of 2bn-2.5bn Swiss francs in its financial accounts for the last three months of the year, although it still expects to make a profit for the year as a whole. The fine is the latest stroke for UBS, following the conviction of rogue trader Kweku Adoboli earlier this year for losing £1.4bn for the bank and a £500m settlement with US authorities for helping US citizens evade taxes. UBS also suffered the worst losses of any bank from US sub-prime mortgages during the financial crisis and necessitated a bailout from the Swiss authorities.  It has not been a good time for UBS!!

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com