Dec. 19 - Swiss bank UBS has been fined $1.5 billion by British, Swiss and U.S regulators to settle charges of manipulating global benchmark interest rates, but it may yet come out stronger. Joel Flynn reports.
It's a monster fine, but they should be OK. UBS has agreed to pay $1.5 billion to regulators in the U.S., UK and Switzerland. The Swiss bank has admitted its staff helped manipulate benchmark interest rates across three continents. It's the second largest fine ever levied on a bank. But It might not be a bad thing. The bank is trying to shift away from some of its investment banking activities. Simon Maughan is from One Tree Securities. SOUNDBITE: One Tree Securities Global Financial Strategist, Simon Maughan, saying (English): "Actually, in a peverse way, the size of these costs actually allow those inside and out of the bank to say 'hey, look, we need to go further, we need to go faster with this reform of the bank. We need to get rid of more of the investment bank, concentrate more on wealth management,' and that will actually have the impact of driving the shares up." UBS shares shot up in early trade after the fine was announced. Traders said the settlement reduced uncertainty. The bank says around 40 people had left or had been asked to leave as a result of the investigation. But some damage maybe more permanent. Brenda Kelly is from IG Index. SOUNDBITE: IG Index Market Analyst, Brenda Kelly, saying (English): "I do think in some ways the fact that they are managing to change Japanese LIBOR rates as well is a little bit more damning and I think in terms of the reputation for the bank which was deemed a very safe bank, being Swiss and the second biggest bank in the UK, is probably quite problematic for it going forward." Barclays was fined in in June for rigging the London interbank offered rate, or Libor. But the UBS fine is more than three times that amount. It's thought the UBS deal is now likely to be followed by a raft of settlements at other banks.