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.
UBS said on Wednesday it will pay $1.2 billion to the U.S. Department of Justice and the Commodity Futures Trading Commission, 160 million pounds ($260 million) to Britain's Financial Services Authority (FSA) and 59 million Swiss francs ($65 million) to Swiss regulator Finma.
A panel of banks submit daily estimates of the interest rates at which they think they could borrow money on the open market.
The FSA said UBS had routinely sought to manipulate submissions to calculate benchmark rates, known as the London Interbank Offered Rate and the Euro Interbank Offered Rate and (Euribor), to make its trading positions more profitable and give the appearance the bank was on a stronger financial footing as the financial crisis began unfolding in 2007.
Below are highlights explaining UBS's misconduct, from the FSA's final notice.
- UBS's breaches occurred between January 1, 2005 and December 31, 2010, in Britain, Japan, Switzerland, the United States and elsewhere
- Individuals at the bank routinely took the positions of interest rate traders into account when making submissions involved in the setting of Libor benchmark rates in Japanese yen, UK pound sterling, Swiss francs, dollars and euros. Individuals at the bank also made internal requests to influence Euribor rates.
- About 40 individuals at UBS made improper requests to influence the rates directly, 11 of whom were managers.
At least five senior managers were also aware of the practice.
- UBS traders sought to influence the submissions of other banks participating in the setting of Japanese yen Libor.
Four UBS traders did so by colluding with interdealer brokers, and one UBS trader in particular also colluded directly with individuals at banks on the rates panel.
- In relation to Japanese yen submissions, UBS made corrupt payments of 15,000 pounds per quarter to brokers for at least 18 months to reward them for their help.