UBS Facing $1 Billion Fine To Settle Libor Rigging Claims [Report]

UBS is facing a $1 billion fine to settle charges of rigging the Libor interest benchmark, according to a source familiar with the situation.

A penalty of $1 billion for the Swiss bank would be more than double the fine of $450 million that was levied against Barclays, a British bank, in June by US and British regulators, reports Reuters.

Should the fine against UBS hold, it will also be the third massive fine to be assessed by the US at a European bank just this week. The source stated:

“The global settlement is about $1 billion. It’s expected early next week — on Monday or Tuesday.”

UBS has declined to comment on the rumored $1 billion fine, along with Britain’s Financial Services Authority and the US Department of Justice and the Commodity Futures Trading Commission (CFTC). Barclays is so far the only bank to pay a fine in relation to the Libor rigging charges. Libor is the London interbank offered rate and is a benchmark used for trillions of dollars of loans around the world.

The fallout from the Libor scandal forced both the chairman and chief executive to quit Barclays. NBC News notes that the backlash from the scandal has also caused backlash on banking standards by the public in Europe and the United States.

Along with leveling fines, British police and anti-fraud investigators made the first arrests in connection with the probe last week when they detained a former trader and two other men. A source familiar with the investigation stated that one of those arrested was former UBS and Cirigroup trader Thomas Hayes. Chris Wheeler, an analyst at Mediobanca in London, stated:

“I’m not sure how much more reputational damage can be done to UBS. They are rebuilding that slowly, but it won’t help the wealth management business when you see this as a headline.”

It is likely that UBS will settle the lawsuit over the Libor scandal soon, though it is uncertain if they will pay a $1 billion fine, or another amount of money.