UBS faces $1 billion fine for Libor rigging: source

Thu Dec 13, 2012 1:32pm EST
 

By Huw Jones

LONDON (Reuters) - Swiss bank UBS (UBSN.VX: Quote) faces a fine of about $1 billion next week to settle charges of rigging the Libor interest rate benchmark, a person familiar with the situation said on Thursday.

Such a penalty would be more than double the $450 million fine levied on British bank Barclays (BARC.L: Quote) in June by U.S. and British regulators and would be the third massive U.S. fine to hit big European banks this week.

"The global settlement is about $1 billion," the source said. "It's expected early next week - on Monday or Tuesday."

UBS declined to comment. Britain's Financial Services Authority and the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) all declined to comment.

Barclays was the first - and so far only - bank to settle charges of rigging the London interbank offered rate, known as Libor, a benchmark used for trillions of dollars worth of loans around the world. Tiny shifts in the rate, compiled from daily polls of bankers, could benefit dealers in complex products.

The fallout from the scandal forced Barclays' chairman and chief executive to quit and prompted a political and public backlash against standards in banking across Europe and the United States. That was partly due to details in the Barclays settlement showing how traders brazenly gamed the system.

Libor is used to price financial products worth more than $300 trillion worldwide and regulators across the world are investigating more than a dozen banks for alleged rigging of rates going back to 2005 or even earlier.

This week British police and anti-fraud officers made the first arrests in connection to the probe, detaining a former trader and two other men, sources said.   Continued...

 
The UBS logo is seen at the UBS 40th Annual Global Media and Communications Conference in New York, December 5, 2012. REUTERS/Carlo Allegri