UBS admits Libor fixing had been going on for years

Executives of Swiss bank tell MPs of 'stealing on a grand scale', while managers are accused of 'gross negligence and incompetence'

"Mercenary" traders at UBS could have been manipulating Libor interest rates for years before the period it paid a record $1.4bn (£873m) in fines, its former bosses admitted today.

Managers, including its former chief executive Marcel Rohner, were accused of "incompetence and gross negligence" by members of the Parliamentary Commission on Banking Standards for failing to spot what the executives admitted was "stealing on a grand scale".

The fine was levied for activities by traders between 2005 and 2010, but the former UBS investment banking chief Huw Jenkins told the commission: "It [Libor fixing] was a very engrained part of the business areas, so it would not surprise me if it was going on before that. I'm clearly deeply sorry we didn't spot this. It is clearly a failing in our systems and controls and our culture that it wasn't highlighted."

Mr Rohner later explained the problem by saying: "When you grow a business too quickly, you hire people from many different places and some of them... you really have to qualify as mercenaries."

Members of the commission, who were told that Mr Jenkins was on a £10m package, looked on aghast when his successor, Jerker Johansson, admitted that he didn't even know of an internal review into the business area that dealt with Libor.

About 40 traders were involved. Some 18 were sacked and a further 22 had left the Swiss bank before the scandal.

Under pressure from Pat McFadden, a Labour member of the commission, and the chairman, Andrew Tyrie, Mr Johansson admitted that management failures were so bad that they amounted to negligence.

The bank's senior yen Libor trader managed to rack up profits of $40m, then $80m, then $160m between 2005 and 2007, and bosses highlighted the operation as a "key strength" in a presentation to London investors. But they failed to raise questions about why the numbers were booming.

Mr Tyrie described their ignorance as "staggering".

Mr Johansson, who ran the investment bank for just over a year, admitted negligence and said that what went on amounted to theft by the traders. He also accepted that the bank's codes of conduct were in effect "worthless".

Hector Sants, the former head of the Financial Services Authority, came under fire later because the ex-UBS managers admitted that they only heard about investigations into what went on at the bank during their tenure through reading the newspaper reports.

Mark Garnier, a former investment banker turned Conservative MP, said it sent "a very bad message" to the banking industry that the watchdog hadn't contacted the men. "The important point is that the first time these individuals have been held to account is when they came here this morning," he said.

Mr Sants, who is taking up a new job looking after compliance at Barclays, said regulators are introducing reforms to ensure that individual bank chiefs can be held to account and sanctioned when things go wrong. He also warned that Britain is exposed to a "danger'" from foreign banks with enormous branches in the UK. Subsidiaries of overseas firms operating in Britain are subject to UK regulation. Branches present watchdogs with a problem because they are the responsibility of the regulators in a bank's home country. This makes it hard for the FSA to act against a firm like, for example, JPMorgan, where a trader known as the London Whale lost billions of dollars through an enormous position built up through derivatives.

Mr Sants called for fundamental change in the way banks, including his new employer, are run. He pledged to consider setting up an anonymous phone line to enable staff to act as whistle blowers.

Suggested Topics
News
Richard Dawkins dedicated his book 'The Greatest Show on Earth' to Josh Timonen
newsThat's Richard Dawkins on babies with Down Syndrome
Extras
indybest
Life and Style
food + drink
Life and Style
fashionLidl to launch a new affordable fashion range
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

.NET Developer

£650 per day: Harrington Starr: C#.NET Developer ASP.Net, C#.net, WCF, WPF, .N...

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Asset Finance Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - ASSET FINANCE - An outstanding...

HR Analyst - Banking - Bristol - £350-£400

£350 - £400 per day: Orgtel: HR Analyst - Banking - Bristol - £350 - £400 per ...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment