Libor Fixing Scandal: UBS Scores Protection Over Future Fines With Another Immunity Deal

UBS has scored another immunity deal, related to the manipulation of some of the world's most important interbank lending rates, after signing an agreement with European Union authorities to protect it from further penalties from the scandal.

According to media reports, the EU has granted UBS with immunity over its role in fixing Libor or Euribor, and has been "rewarded" for cooperating with investigators and turning over information about other banks,

UBS has declined to comment to IBTimes UK.

Libor valuations directly influence the value of trillions of dollars of financial deals between banks and other institutions.

The benchmark reference rates are used in euro, US dollar and British sterling over-the-counter (OTC) interest rate derivatives contracts and exchange traded interest rate contracts.

Libor Fixing Fines

Barclays was the first to settle with UK and US authorities in June 2012 for £290m (€348m, $470m).

Nearly six months later UBS agreed a record $1.5bn fine with US, UK and Swiss authorities and also admitted to one count of wire fraud relating to rigging rates in Yen.

UBS' investment banking unit in Japan was also ordered to pay a $100m criminal penalty after pleading guilty to committing wire fraud in connection to the scandal.

In February 2013, RBS became the third major bank to settle with regulators while its subsidiary, RBS Securities Japan Limited, also pleaded guilty to one criminal charge of wire fraud.

In September this year, Icap was ordered to pay £55m to US and UK authorities after a significant number of brokers, including two managers, attempted to rig rates between October 2006 and November 2010.

In October, Rabobank was fined €774m by global regulators and its chairman and CEO Piet Moerland stepped down early, ahead of his retirement.

A couple of weeks later, veteran Rabobank executive Sipko Schat stepped down with immediate effect because Rabobank's members no longer supported him following the Libor fixing scandal.

UBS Immunity Deals

UBS has already secured a number of immunity deals with other authorities.

Last year, UBS revealed in a report saying it had reached immunity deals with the US' Department of Justice, Swiss Competition Commission (Weko) in Switzerland and, watchdog, Canadian Competition Bureau, giving it protection against enforcement action in relation to certain transactions and submissions for Yen Libor and Euroyen Tibor (Japan's interbank lending rate).

In the latest UBS quarterly report, the Swiss bank mentioned these previous immunity deals and added: "The conditional leniency and conditional immunity grants do not otherwise affect the ability of private parties to assert civil claims against us."