ZURICH, Dec 19 (Reuters) - Unlike the outrage that hit Barclays after the British bank was fined for rigging a benchmark interest rate, reaction in Switzerland to UBS’s 1.4 billion franc ($1.53 billion) penalty for the same offence has been muted.
There appears to be little appetite to attack UBS, whose reputation has already been tarnished by a series of damaging mistakes.
The Swiss government and Swiss National Bank both said they had taken note of the penalty, but didn’t comment further on Wednesday.
Even Christian Levrat, president of the left-wing Social Democrats (SP) which is typically critical of banks, stopped short of calling for any specific changes at the bank.
He said he wanted UBS to be more transparent and cooperative in unearthing past scandals. “This game of cat-and-mouse must stop,” he told Reuters.
The seeming nonchalance over UBS is a sharp contrast with the crisis that engulfed Barclays, which got a much smaller fine of $450 million in June.
Barclays had hoped that it would get some credit by going first in what is expected to be a series of banks making settlements related to manipulating the Libor rate. Instead, the fine triggered a storm of angry newspaper headlines and outrage in parliament and among the British public.
Barclays’ chief executive Bob Diamond was forced out of his job less than a week later and Chairman Marcus Agius has also been replaced.
Lawmakers grilled top officials at the Bank of England and Financial Services Authority and accused them of failing to respond properly to U.S. concerns about possible Libor rigging.
The contrasting fates of the two banks may suggest a “wait and see” policy makes more sense, according to insiders at Deutsche Bank, which is facing months of investigation for its part in the global Libor scandal.
“The one who moved first here has lost,” said a source at Deutsche Bank, which was not involved in settlement negotiations.
Paul Dembinski, a Swiss university professor who heads the Observatoire de la Finance, a think tank that studies the ethics of finance, said UBS had seen the risk and managed it well.
“This settlement is a way of not opening all the books and not showing everything. It’s a way of managing risks,” he said. “From a bank perspective it’s a very reasonable amount.”
About 40 employees have left UBS over the scandal, a fraction of the 10,000 job losses planned as the bank withdraws from fixed-income business.
“People were in the process of adjusting to the 10,000 cuts and starting to get more comfortable looking ahead to where we want to be in 2015, so this (fine) is a distraction,” a senior UBS employee told Reuters.
“That notwithstanding, there is a general feeling we’re doing the right things and moving in the right direction,” the employee added.
Despite the size of UBS’s fine, it remains unclear if the scandal will cost UBS more than the money it made from Libor manipulation.
In a memo to staff, Chief Executive Sergio Ermotti said the bank was unable to assess the impact on its clients.
“The regulatory investigations continue, and we are far from having an understanding of the effect of the actions of multiple institutions on the actual rate fixings, which one would need to know before trying to determine whether or how clients were affected,” he said.
UBS did not mention the damage to savers and borrowers in its public statement.