UBS admits fraud; bank fined $1.5bn
Zurich , December 19, 2012
Swiss bank UBS was hit with a $1.5 billion bill and admitted to fraud on Wednesday in order to settle charges of manipulating global benchmark interest rates.
The penalty agreed with US, UK and Swiss regulators is more than three times the $450 million fine levied on Britain's Barclays in June for rigging the Libor benchmark rate used to price financial contracts around the globe.
It is the second-largest fine paid by a bank and comes a week after Britain's HSBC agreed to pay the biggest ever penalty - $1.92 billion - to settle a probe in the US into laundering money for drug cartels.
"We deeply regret this inappropriate and unethical behavior. No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity," UBS chief executive Sergio Ermotti said in a statement disclosing the extent of the wrongdoing, which took place over six years from 2005 to 2010.
UBS said it will pay $1.2 billion to the US Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC), 160 million pounds to the UK's Financial Services Authority and 59 million Swiss francs from its estimated profit to Swiss regulator Finma.
The FSA said at least 45 people were involved in the rigging, which took place across a range of Libor currencies.
A similar admission by Barclays in June touched off a political firestorm that forced its chairman and chief executive to quit.
The Libor benchmarks are used for trillions of dollars worth of loans around the world, ranging from home loans to credit cards to complex derivatives.
Tiny shifts in the rate, compiled from daily polls of bankers, could benefit banks by millions of dollars. But every dollar a bank benefited meant an equal loss by a bank, hedge fund or other investor on the other side of the trade - raising the threat of a raft of civil lawsuits.
The steep fine for UBS is despite the bank, since 2011, cooperating with law-enforcement agencies in their probes. The bank said it received conditional immunity from some regulators.
UBS has had a tough 18 months after suffering a $2.3 billion loss in a rogue trading scandal, management upheaval and thousands of job cuts. - Reuters
More Finance & Capital Market Stories
- Saudi investor exits first UK real estate investment
- Dubai Investments Park celebrates Nasdaq listing
- Norton Rose Fulbright advises on IDB $1.5bn sukuk
- IGIH posts 24pc rise in profit
- Tokyo exchange inks Dubai agreement
- PiSlice, du partner to encourage micro-lending
- Bank Alkhair swings to $4.7m profit
- BMI launches new personal loan promotion
- Experts shed light on key Fatca legislation
- Saudi inflation plunges to four-year low
- UAE investment appetite 'strengthens' says expert
- Dubai mulls rule change to woo domiciled funds
- UAE, Abu Dhabi roll over $20bn of Dubai's debt
- Saudi can achieve 4.4pc growth this year
- Emaar listing of retail unit 'within months'
- Dubai Investments nets $29m profits
- Compliance officers facing diverse pressures, says study
- Abu Dhabi finance dept inks deal with Ajman
- Kuwait registers 8pc credit growth
- Bahrain Sico funds net solid returns
- Emaar proposes 15pc cash dividends
- ABG units win top Islamic finance award
- Finance House approves 25pc cash dividends
- Qatar 'most expensive country in Gulf'
- Egypt regulator sets rules for index
- Dubai Islamic eyes Kenya, Indonesia for expansion
- ADCB to buy back 3pc of its shares
- GCC insurance growth outpaces developed markets
- Bahrain 'faces budget deficit, inflation challenges'
- Global Payment Services wins key certification