UBS to pay $1.5B in Libor settlement

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By James Shotter in Zürich and Brooke Masters in LondonDecember 19, 2012 -- Updated 1143 GMT (1943 HKT)/*var clickExpire="-1";var playerOverRide={headline:"UBS slapped with $1.5 billion in fines",images:[{image:{height:"360",width:"640",text:"http://i2.cdn.turner.com/cnn/dam/assets/121027104640-ubs-bank-logo-story-top.jpg"}}]};*/window.jQuery(document).ready(function() {window.CNNVIDEOS = window.CNNVIDEOS || {};CNNVIDEOS[ 'T1' ] = CNNVIDEO( 'cnnCVP1', {video: 'business/2012/12/19/intv-wbt-ubs-libor-fines-silva.cnn',thumb: 'http://i2.cdn.turner.com/cnn/dam/assets/121027104640-ubs-bank-logo-story-top.jpg',preset: 'storypage',diagnostics: {section: 'articlepage',placement: 'page-top'},network: 'cnn',adsection: cnnCVPAdSectionT1 || '',headline: 'UBS slapped with $1.5 billion in fines',videoSource: 'CNN',videoSourceUrl: '',url: ''});// pause other videos playing on pagewindow.jQuery( '#cnnCVP1' ).on( 'onContentBegin', function( e, obj ) {for ( var instance in window.CNNVIDEOS ) {if ( instance !== 'T1' && window.CNNVIDEOS.hasOwnProperty( instance ) ) {try { window.CNNVIDEOS[ instance ].pause(); } catch(e){}}}});});/*var cnnWindowParams=window.location.toString().toQueryParams();if(typeof cnnWindowParams.video!="undefined"){if(cnnWindowParams.video){cnnLoadStoryPlayer('business/2012/12/19/intv-wbt-ubs-libor-fines-silva.cnn','cnnCVP1', '640x384_start_art' ,playerOverRide,T1);}} else {$('cnnCVP2').onclick=function(){if ($$('.box-opened').length){$$('.box-opened').each(function(val){Element.fireEvent(val,'click');});}cnnLoadStoryPlayer('business/2012/12/19/intv-wbt-ubs-libor-fines-silva.cnn','cnnCVP1','640x384_start_art',playerOverRide,T1);};$('cnnCVP2').onmouseover=function(){$('cnnCVP2').className='cnn_mtt1plybttn cnn_mtt1plybttnon';};$('cnnCVP2').onmouseout=function(){$('cnnCVP2').className='cnn_mtt1plybttn';};}*/UBS has agreed to pay $1.5 billion to U.S., UK and Swiss regulators in Libor settlementIt is the second bank to settle with regulators over the Libor scandalIt was the first bank to disclose it was under investigation for maniputlaion of the LiborThe Libor probe has drawn in over a dozen banks on three continents

(Financial Times) -- UBS has agreed to pay $1.5 billion to US, UK and Swiss regulators as part of a global settlement over allegations that it tried to manipulate Libor interest rates.

As part of the settlement, the Swiss bank's Japanese unit agreed to enter a plea of one count of wire fraud related to the rigging of various rates, including Yen Libor.

UBS is the second bank to settle with regulators over the Libor scandal. In March 2011, it became the first bank to disclose it was under investigation for attempted manipulation of the London Interbank Offered Rate (Libor) which is used to price more than $350tn in contracts worldwide.

In June, Barclays agreed to pay £290m to US and UK regulators over its role in the Libor scandal. The resulting furore cost Barclays its chief executive and chairman, and sparked wholesale reform of the way Libor is set.

As part of Wednesday's settlement, Finma, the Swiss regulator, ordered UBS to disgorge SFr59m of profits for its role in the manipulation of Libor.

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Finma also found that some UBS managers had urged employees to submit rates that would "positively influence the perception of UBS's creditworthiness" between 2007 and 2008. The regulator said numerous employees and a limited number of managers were involved.

The Libor probe has drawn in over a dozen banks on three continents. Last week, three men, including a former UBS trader, were arrested and bailed without charge pending further investigation. Several former UBS employees have been notified by the UK Financial Services Authority that they are personally under investigation.

Wednesday's settlement caps a tumultuous few months for Switzerland's largest bank and its relatively new leadership team of Sergio Ermotti, chief executive, and Axel Weber, chairman.

In November, UBS was fined £29.7m by Britain's Financial Services Authority for control failures that allowed rogue trader Kweku Adoboli to take positions that cost the bank $2.3bn in 2011 and Oswald Grübel, then chief executive, his job.

The previous month, UBS announced a SFr2.2bn third-quarter loss as Mr Ermotti unveiled a plan to cut its investment banking operations in half. He said UBS would shed 10,000 jobs and refocus on its more lucrative wealth management operations.

© The Financial Times Limited 2012

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