UBS faces $1.6 billion fine over Libor rigging: paper

Sat Dec 15, 2012 7:37am EST
 
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ZURICH (Reuters) - UBS UBSN.VX faces a fine of 1.5 billion Swiss francs ($1.63 billion) to settle interest rate rigging charges, a Swiss newspaper reported on Saturday.

Citing unnamed sources, Tages-Anzeiger daily said the bank would admit 36 traders around the globe manipulated yen Libor between 2005 and 2010. A UBS spokesman declined to comment.

People familiar with the matter told Reuters on Friday UBS could reach a $1-billion-plus settlement and admit to criminal wrongdoing by its Japanese arm, where one of its traders manipulated yen Libor and euroyen contracts.

Between 25 and 30 people have left UBS over the matter, the sources said. The Swiss bank had hoped for a softer touch from regulators by cooperating in industry-wide probes and was surprised by the size of the expected settlement, they added.

A 1.5 billion franc settlement would be the biggest ever paid by the bank, recovering from a $2.3-billion trading fraud by London-based trader Kweku Adoboli for which it was fined 30 million pounds ($48.36 million) last month.

A settlement would make UBS the second major bank to be sanctioned for its role in the Libor scandal. Britain's Barclays BARC.L paid a $450 million fine in June.

Libor is the rate used as a benchmark for pricing trillions of dollars worth of financial instruments and contracts around the globe. Tiny shifts in the rate, compiled from daily polls of bankers, could benefit dealers in complex products.

HEADING FOR LOSS

Tages-Anzeiger said the fine, together with restructuring charges of 500 million francs from plans to cut 10,000 staff as UBS winds down its fixed income business, would probably push the bank to a fourth-quarter loss.   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