UBS prepares to pay Libor fine of more than $450m

Tim Wallace
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SWISS banking giant UBS is set to be the next bank to settle with regulators over Libor manipulation claims, it emerged yesterday, with RBS likely to follow suit in the coming months.

The bank could take the hit as soon as next week under negotiations taking place with the authorities in the UK and the US, with the fine likely to come in at above $450m (£279m).

Such a sanction would put UBS’s punishment on a par with that of Barclays, which was hit with a £290m fine in June. The fallout from the scandal led to the departure of chief executive Bob Diamond and chairman Marcus Agius.

An RBS settlement is expected to follow shortly after UBS, and chief executive Stephen Hester has made it clear he wants to finalise the sanction before the bank’s full year results in February.

The key interbank lending rate is thought to have been manipulated by a range of major banks, which are believed to have entered false data either because traders wanted to change the headline rate, make the bank’s borrowing costs appear lower than they really were or because no trades had taken place and only estimates could be made as to the hypothetical level of interest rates.

Barclays negotiated quickly with regulators in the hope of benefiting from a policy of honesty, but received a public mauling instead.

As a result the remaining banks are believed to be jockeying for position, with none wanting to be the next to be fined.

But it is understood UBS lost that argument, in part because the authorities want to prove the problem was not solely confined to British banks.

“UBS has been cooperating fully with the regulatory and enforcement authorities in connection with Libor investigations,” said a spokesperson from the Swiss bank.

“As we are in the midst of discussions with those authorities, we cannot comment further.”

It is thought that RBS would face less of a blow to its image as the bailed out bank’s chief executive was not a part of the institution when the wrongdoing took place and he has been very proactive in cleaning up its business relatively publicly.

The Financial Services Authority and RBS both declined to comment on the ongoing discussions.