UBS facing US$1.6b penalty to settle Libor claims

PUBLISHED : Tuesday, 18 December, 2012, 12:00am
UPDATED : Tuesday, 18 December, 2012, 4:43am


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UBS is set to pay as much as US$1.6 billion to settle claims of Libor manipulation by the US Department of Justice, the Commodity Futures Trading Commission, the British Financial Services Authority (FSA) and the Swiss Financial Market Supervisory Authority, said a person familiar with the probes.

The announcement could come by today, said the source.

The US$1.6 billion figure would be more than three times the £290 million (HK$3.63 billion) that Barclays agreed to pay last June to settle allegations that its employees conspired to manipulate the London interbank offered rate, which is used in bank borrowing.

As part of the case, US prosecutors are planning to file charges against multiple bankers associated with UBS' rigging of Tokyo interbank lending rates, according to another person with knowledge of the matter. The charges would be the first brought by the justice department against individuals alleged to have manipulated Libor and comparable lending rates in Europe and Japan.

The prosecution is slated to begin in tandem with an announcement that UBS Securities Japan, the Japanese unit of the Zurich-based bank, would plead guilty to manipulating Japanese interest rates starting in 2007, said the second source.

Spokesmen for UBS, the FSA and the Swiss financial markets regulator all declined to comment on the settlement amount.

Karina Byrne, a spokeswoman for UBS, said last week in an e-mail: "We continue to work closely with various regulatory authorities to resolve issues relating to the setting of certain global benchmark interest rates. As we are in active discussions with these authorities, we cannot comment further."

Unlike the pending settlement with UBS, the justice department did not require Barclays to enter a guilty plea to a specific charge.

In deciding against a charge last June, US prosecutors praised the British bank's "timely, voluntary and complete disclosure of facts".

UBS has been "granted conditional leniency or conditional immunity" by the justice department's antitrust division, in connection with potential antitrust violations related to submissions for interbank lending rates in Tokyo, according to the Swiss bank's most recent annual report.