Dec. 17 - Swiss bank UBS is expected to pay $1.5 billion to regulators to settle charges that a group of traders rigged Libor interest rates, according to sources, and would be the latest blow to the lender which has faced a rogue trading scandal. Joanna Partridge reports
It's been a tough few years for UBS - rocked by a rogue trading scandal, a U.S. tax investigation and huge subprime losses. Now the Swiss bank is expected to be stung in the next few days by a $1.5 billion fine to settle charges of rigging Libor interest rates. It will be the second bank to pay a penalty to U.S. and UK regulators. The expected size of the fine has surprised some analysts. Sources have told Reuters the fine will come to around 1 and a half billion dollars - three times the $450 million British bank Barclays paid in June. Reports say UBS will admit 36 traders around the globe manipulated the yen Libor rate between 2005 and 2010. While this may draw a line under the Libor scandal for UBS, that's not the case for other lenders says Michael Hewson from CMC Markets. SOUNDBITE: Michael Hewson, Market analyst, CMC Markets, saying (English): "I would imagine there's probably more skeletons in the cupboard. And at some point I really think that policy makers and regulators need to start to focussing on the fact that we'll probably need banks to engineer a recovery in growth and at some point there needs to be a line in the sand drawn. I think regulators need to be careful about levering too high fines." Huge bank fines keep making the headlines. HSBC has just paid $1.9 billion to settle money laundering charges, while Standard Chartered has agreed to pay over $327 million for violating U.S. sanctions against Iran. Chris Hughes from Reuters Breaking Views says these are challenging times for the sector. Chris Hughes, Reuters Breaking Views, saying (English): "Almost all banks have got some kind of you know issue with the regulators, whether it be the speed at which they are going to get up to new post-crisis capital requirements, some kind of regulatory probe." Over a dozen banks have been caught up in the international inquiry into Libor rates. Royal Bank of Scotland is seen as the next lender to reach a settlement with regulators. Media reports have suggested RBS' penalty will come to around $560 million.