UBS, Deutsche Bank confirm cooperation in forex probes

Tue Oct 29, 2013 2:58pm EDT
 
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By Katharina Bart

ZURICH (Reuters) - UBS and Deutsche Bank confirmed they were cooperating with regulators probing alleged rigging in the $5.3 trillion-a-day foreign exchange market, with UBS saying it had taken "swift action" to review its operations.

The confirmations by two of the world's biggest players in the currency markets come as investigations broaden, with the U.S. Justice Department acknowledging publicly for the first time that it was involved.

UBS Chief Executive Sergio Ermotti told journalists on Tuesday that his bank had moved quickly to launch an internal investigation of its forex operations and was working with regulators. He did not provide further details.

Deutsche Bank said separately that it was cooperating with regulators and that the investigations were "in early stages." Deutsche declined to comment further.

Several countries have now opened investigations amid media reports that traders have manipulated some fixings - snapshots of where currencies are trading at a particular time in the market - which are used to price trillions of dollars worth of investments.

UBS shares fell almost 8 percent following news that the Swiss regulator FINMA had imposed a temporary 50 percent increase in the amount of capital the bank holds against risk weighted assets, to cover potential costs of unknown legal probes.

Asked whether FINMA's move was linked to the foreign exchange investigation, Ermotti said there was no indication the top-up was related to a single item but rather it was an assessment based on the entire portfolio of UBS.

The uncertainty surrounding possible rate manipulation raises painful memories for UBS and its shareholders. It was one of the first financial institutions rapped for its role in the rigging of the Libor interest rate benchmark.   Continued...

 
The logo of Swiss bank UBS is seen at a branch office in Zurich October 29, 2013. REUTERS/Arnd Wiegmann