Wednesday, December 19, 2012
GENEVA (AP) — Switzerland’s UBS AG agreed today to pay some $1.5 billion in fines to international regulators following a probe into the rigging of a key global interest rate.
In admitting to fraud in its Japanese unit, Switzerland’s largest bank became the second bank, after Britain’s Barclays PLC, to settle over the rate-rigging scandal. The fine, which will be paid to authorities in the U.S., Britain and Switzerland, also comes just over a week after HSBC PLC agreed to pay nearly $2 billion for alleged money laundering.
The settlement caps a tough year for UBS and the reputation of the global banking industry. As well as being ensnared in the industry-wide investigation into alleged manipulations of the benchmark LIBOR interest rate, short for London interbank offered rate, UBS has seen its reputation suffer in a London trial into a multibillion dollar trading scandal and ongoing tax evasion probes.
As a result of the fines, litigation, unwinding of real estate investments, restructuring and other costs, UBS said it expects to make a fourth quarter net loss of $2.2-2.7 billion.
Other banks are expected to be fined for their involvement in the LIBOR scandal. LIBOR, which is a self-policing system and relies on information that global banks submit to a British banking authority, is important because it is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.
UBS said some of its personnel had “engaged in efforts to manipulate submissions for certain benchmark rates to benefit trading positions.”
In accepting the fines, UBS said some of its employees tried to rig the LIBOR rate in several currencies, but that its Japan unit, where much of the manipulation took place, entered a plea to one count of wire fraud in an agreement with the U.S. Justice Department.