SWISS banking giant UBS has agreed to pay regulators in Switzerland, the UK and US £940 million for its part in the rate-rigging scandal.
The settlement is the largest to date in relation to the manipulation of key benchmark rates that are used to set the prices of loans, mortgages and other financial products, and dwarfs the £290m fine handed down to Barclays earlier this year.
It also is the second-largest fine paid by a bank – last week HSBC agreed to pay the biggest ever penalty of $1.92 billion (£1.18bn) to settle a money-laundering probe in the US.
UBS will pay $1.2bn to the US department of justice and the Commodity Futures Trading Commission, along with £160m to the UK’s Financial Services Authority and SFr59m (£39.8m) to Swiss regulator Finma.
The FSA’s fine is the highest ever handed down by the City watchdog, which said UBS traders routinely made requests for others at the bank to adjust their London interbank offered rate (Libor) and Euribor submissions.
The regulator said: “The misconduct was extensive and widespread. At least 2,000 requests for inappropriate submissions were documented – an unquantifiable number of oral requests, which by their nature would not be documented, were also made.”
Zurich-based UBS admitted that some staff had “engaged in efforts to manipulate submissions” and others had “colluded with employees at other banks and cash brokers to influence certain benchmark rates to benefit their trading positions”.
The bank made corrupt payments of £15,000 a quarter to brokers over at least 18 months, the FSA said. Its report revealed incriminating conversations between traders and brokers, saying they would “play the rules” and “return the favour”.
For example, on 18 September 2008, one trader told a broker that, if they kept the six-month Japanese yen Libor unchanged, “I’ll pay you, you know, $50,000, $100,000… whatever you want… I’m a man of my word”.
Bankers referred to each other in congratulatory terms, such as “the three muscateers (sic)”, “Superman”, and “Captain caos (sic)”, the FSA added.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “The findings we have set out in our notice do not make for pretty reading.”
She said UBS traders and managers manipulated the bank’s submissions “to benefit their own positions and to protect UBS’s reputation, showing a total disregard for the millions of market participants around the world who were affected”.
UBS chief executive Sergio
Ermotti said the group “deeply” regretted the wrongdoing, which took place between 2005 and 2010.
Royal Bank of Scotland has said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.