UBS set to settle with regulators over Libor fixing

One of the City’s top investment banks UBS is close to settling with UK and US regulators to pay a record amount over claims that its traders fixed the key Libor interest rate.

The Swiss bank will pay even more than the £290 million which Barclays handed over to the Financial Services Authority and various US regulators in June, according to the New York Times. “UBS has been co-operating fully with the regulatory and enforcement authorities in connection with Libor investigations,” said a UBS spokesman in London. “As we are in the midst of discussions with those authorities, we cannot comment further.”

If the bank agrees the settlement with a number of authorities, including the Commodity Futures Trading Commission and the US Department of Justice as  well as the FSA, it could set the stage for even larger payouts by  other banks.

Royal Bank of Scotland has already said it hopes it can strike a deal before it announces its full-year results in February. Deutsche Bank said last month that it had set aside money to cover any fines but would not comment on what scale. Other banks being investigated include Citigroup, JPMorgan Chase and HSBC. Former traders from UBS, RBS and Barclays could be arrested in this country over their roles in the Libor-fixing scandal.

Canadian, Swiss and Asian regulators are also investigating at least a dozen banks over Libor fixing. The New York attorney general has subpoenaed 16 banks over their role in the scandal, which could be a forerunner for civil suits against them.

Last week, the Government published a consultation over bringing Libor — and possibly other benchmark indices — under the oversight of financial regulators and making manipulation of such indices a criminal offence.

Libor is a benchmark used for $300 trillion of financial products worldwide calculated from submissions banks make to the British Bankers’ Association each day. It is used as a reference point for all kinds of loans from mortgages to corporate borrowing.

Last month UBS paid a £47.4 million fine to the FSA for not controlling rogue trader Kweku Adoboli who lost the bank $2.3 billion (£1.4 billion) in unauthorised trading. Three years ago, it paid US regulators $780 million to settle allegations it allowed Americans to evade tax through offshore accounts.