Libor Fixing Scandal: UBS Close to $450m Settlement with UK and US Regulators

UBS is close to settling with US and UK regulators over allegations of London Interbank Offered Rate (Libor) manipulation, which could result in the bank paying a similar amount that Barclays stumped up in June this year.

According to a report in the New York Times, the Swiss bank is in advanced settlement talks with the Commodity Futures Trading Commission (CFTC), the US Department of Justice (DoJ) and Britain's Financial Services Authority (FSA), after a lengthy investigation that accused some of its employees of submitting false Libor rates.

If UBS were to settle soon, it would follow Barclays which settled for a record fine with the same authorities for £290m ($450m) for manipulating Libor benchmark interest rates, which resulted in the resignation of a number of senior executives, including its chairman, CEO and COO.

While Barclays have already settled, the bank, as well as dozens of others are still under investigation in other jurisdictions.

UBS representatives told IBTimes UK, "we have been cooperating fully with the regulatory and enforcement authorities in connection with these investigations." However, representatives would not confirm the report.

In August this year, UBS confirmed that its head of swap trading, Jay V. Merchant, left the bank amid reports that he is under investigation for the possible manipulation of Libor.

Meanwhile, over the last couple of years, Japanese regulators have suspended some banks' operations, such as Citigroup and UBS, after the Securities and Exchange Surveillance Commission (SESC) found that some staff attempted to manipulate Tokyo interbank offered rates (Tibor).

In UBS' penultimate quarterly report, the Swiss bank said it had reached immunity deals with the Department of Justice and regulators in Switzerland and Canada, giving it protection against enforcement action in relation to certain transactions and submissions for Yen Libor and Euroyen Tibor.

"Several government agencies, including the SEC, the US Commodity Futures Trading Commission, the DOJ and the FSA, are conducting investigations regarding submissions with respect to British Bankers' Association LIBOR rates," says part of the statement. "We understand that the investigations focus on whether there were improper attempts by UBS (among others), either acting on our own or together with others, to manipulate LIBOR rates at certain times. In addition, the Swiss Competition Commission (WEKO) has commenced an investigation of numerous banks and financial intermediaries concerning possible collusion relating to LIBOR and TIBOR reference rates and certain derivatives transactions."

"UBS has been granted conditional leniency or conditional immunity from authorities in certain jurisdictions, including the Antitrust Division of the DOJ and WEKO, in connection with potential antitrust or competition law violations related to submissions for Yen LIBOR and Euroyen TIBOR.

WEKO has also granted UBS conditional immunity in connection with potential competition law violations related to submissions for Swiss franc LIBOR and certain transactions related to Swiss franc LIBOR. The Canadian Competition Bureau has granted UBS conditional immunity in connection with potential competition law violations related to submissions for Yen LIBOR. As a result of these conditional grants, we will not be subject to prosecutions, fines or other sanctions for antitrust or competition law violations in the jurisdictions where we have conditional immunity or leniency in connection with the matters we reported to those authorities, subject to our continuing cooperation," adds the statement.