Exclusive: UBS Chairman proposes industry-wide settlement over Libor

Fri Jan 25, 2013 4:47pm EST
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By Alexander Smith

DAVOS, Switzerland (Reuters) - UBS Chairman Axel Weber raised the possibility of an industry-wide settlement for the rest of the banks involved in the Libor rate fixing scandal at a meeting of top bankers in Davos, sources familiar with the matter said.

Among the top bankers and officials present at the meeting on Thursday were Bank of Canada Governor Mark Carney, JP Morgan Chase Chief Executive Jamie Dimon, Citigroup CEO Mike Corbat and HSBC Chairman Douglas Flint. Carney is due to take over as head of the Bank of England later this year.

Swiss bank UBS reached a $1.5 billion settlement in December with U.S. and British regulators over its role in the manipulation of the London interbank offered rate, a benchmark used for trillions of dollars of financial instruments ranging from home loans to complex derivative products. It was the second bank to settle, after Britain's Barclays.

U.S. British and other regulators are investigating more than a dozen global banks over manipulating the rate, which is compiled from data banks submit about how much interest they are charged for loans from other banks.

Weber used the meeting of bankers at the annual World Economic Forum in the Swiss Alpine resort to argue that an industry-wide settlement - similar to deals which have been struck with U.S. regulators in the past - would prevent further reputational damage to the industry.

One of the sources said that although the idea was discussed briefly during the meeting, there was no agreement on pursuing it. UBS declined to comment on the meeting, which was held in private. The sources spoke on condition they not be named.

Details of the rigging of the Libor rate in settlements reached with UBS and Barclays provoked public and political outrage. In the case of Barclays, fined $450 million, it led to the departure of its chief executive and chairman.

Britain's Royal Bank of Scotland is expected to become the third bank to reach an accord, with a deal involving a financial penalty of up to 500 million pounds expected within days or weeks, sources have said.   Continued...

Chairman of Swiss bank UBS Axel Weber adjusts his glasses during the annual World Economic Forum (WEF) meeting in Davos January 23, 2013. REUTERS/Pascal Lauener