Swiss banking giant UBS has been given a
record fine of 1.5 billion dollars by US and British regulators for
attempting to manipulate the Libor interbank lending rate, the bank
said Wednesday.
"We deeply regret this inappropriate and unethical behaviour,"
said UBS chief executive Sergio Ermotti. "No amount of profit is more
important than the reputation of this firm, and we are committed to
doing business with integrity."
The settlement includes payment of 1.2 billion dollars in combined
fines to the US Department of Justice and the Commodities Futures
Trading Commission, 260 million dollars to Britain's Financial
Services Authority (FSA) and 65 million dollars to the Swiss
Financial Market Supervisory Authority.
UBS said it has also agreed to admit to committing wire fraud
through its Tokyo office in the case of manipulating Libor rates for
loans denominated in Japanese yen, among others.
The Zurich-based bank with a staff of around 6,500 in London is
the second major bank to be fined over the interbank lending rate
scandal. Britain's Barclays bank was ordered to pay 450 million
dollars to British and US authorities in June.
The FSA said the misconduct was "extensive and widespread" as UBS
traders had "routinely made requests" to colleagues responsible for
determining Libor submissions in an effort to benefit their own
trading positions.
It said that at least 45 individuals including traders, managers
and senior managers were involved in, or aware of, the practice. The
regulator recorded at least 2,000 requests for inappropriate
submissions and said many more would have been made orally.
Last month, Ghanaian-born trader Kweku Adoboli, 32, was sentenced
to seven years in jail for fraud after being found guilty of gambling
away 2.2 billion dollars of UBS assets in bad deals.
Adoboli said he did not act alone and was "pressurized" by
superiors into taking risks.
Libor is the umbrella term for benchmark rates that underpin the
terms of 500 trillion dollars of contracts from mortgages to the cost
of corporate lending.
The current internationally-based investigations into Libor rate
rigging involve some 20 banks and financial institutions, including
German and British banks, such as part-nationalized Royal Bank of
Scotland.
UBS said the fines - along with other payouts for mis-selling
mortgage debts in the US - were likely to result in the bank
recording a loss for the last three months of the year, although it
still expected to make a profit for the year as a whole.
The Swiss lender acknowledged its staff had manipulated the
borrowing rates it submitted, which were then used to calculate the
Libor rate.
According to the FSA, UBS had even given its traders formal
responsibility for handling the bank's submissions to the
Libor-setting committee at the British Bankers' Association -
creating a direct conflict of interest, as the traders could profit
depending on what they submitted.
UBS also admitted that its traders had colluded with their
counterparts at other banks and brokerages, the FSA said. The bank's
Tokyo office had made corrupt payments to brokerages - who helped to
bring borrowers and lenders together anonymously in the inter-bank
lending market - in order to enlist their support in manipulating
Libor.
Commenting on the settlement, UBS chairman Axel Weber said: "The
authorities have recognized UBS for the thoroughness of our
investigation and our exceptional co-operation."
