SWISS bank UBS was yesterday hit with almost £1bn of fines for Libor fixing around the globe – a fine three times larger than the penalty paid by British bank Barclays in June.
And the US authorities announced two former traders, including one Briton, have been charged with conspiracy and face extradition.
Dozens of traders and managers were found to have fiddled rates in the inter-bank market for the gain of the bank, themselves and their counterparts at other banks and brokerages.
More than 2,000 requests for false interest rates to be entered were made on internal messaging systems, in order to flatter traders’ positions and make the bank look stronger than it was in the financial crisis, the Financial Services Authority found.
It thinks many verbal requests were also made, with 40 staff including 11 managers directly involved, as well as at least two other managers and five senior managers aware of the practice.
The bank also corruptly paid tens of thousands of pounds to brokerages to enter false information.
The US Department of Justice announced former traders Tom Alexander William Hayes, a 33-year-old Briton, and Swiss banker Roger Darin, 41, have been charged with conspiracy in Manhattan federal court.
The FSA has not revealed the names of those it believes were involved as investigations are ongoing.
The watchdog fined UBS £160m for rate fixing, with US fines taking the total to £940m. Barclays was fined £59.5m in the UK and £290m globally.
“UBS’s misconduct is considerably more serious than Barclays’ because it was more widespread within the firm, being exacerbated by the control failings,” said the FSA.
UBS said it has cleaned up its act, eliminating conflicts of interest by moving responsibility for Libor submissions to the group treasury. It is also winding down riskier activities.
“We deeply regret this inappropriate and unethical behaviour,” said CEO Sergio Ermotti. “We are committed to doing business with integrity.”
RBS is expected to be the next bank to settle. Chief exec Stephen Hester has made clear he wants to put the claims behind the bank by February.
The manipulation of Libor may have cost US mortgage giants Fannie Mae and Freddie Mac losses of more than $3bn, their regulator estimates.
18 September 2008, a trader to a broker:
“if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today ... I will f***ing do one humongous deal with you ... Like a 50,000 buck deal, whatever ... I need you to keep it as low as possible ... if you do that .... I’ll pay you, you know, 50,000 dollars, 100,000 dollars... whatever you want ... I’m a man of my word.”
10 June 2009, a broker to a trader:
“mate yur getting bloody good at this libor game... think of me when yur on yur yacht in monaco wont yu”
25 June 2009, in a public chat with 58 participants
Manager: “JUST BE CAREFUL DUDE”.
Trader-Submitter: “i agree we shouldnt ve been talking about putting fixings for our positions on public chat.”