Reuters:UBS to pay $545 million over forex scandal,rivals await fate

(UBSG.VX) will plead guilty to rigging benchmark and pay $545 million to U.S. authorities to settle their probe into alleged manipulation of foreign exchange rates.

The ’s payment is part of what is expected to be a combined $5 billion settlement by five of the world’s biggest banks with U.S. and British authorities over alleged manipulation of the $5-trillion-a-day .

A file picture shows the waning moon behind a logo of Swiss bank UBS in Zurich, Switzerland February 10, 2015. Reuters/Arnd Wiegmann/Files

 

 

 

 

 

 

 

 

 

 

Regulators had already fined six banks $4.3 billion last year for failing to stop their traders from trying to manipulate forex rates. This followed a year-long inquiry which has put the largely unregulated market on a tighter leash and accelerated a push to automate trading.

authorities joined the global investigation into the forex market this week, showing how there is some way to go before banks can try to put this behind them.

UBS said on Wednesday the had fined it $342 million for its role in the forex scandal. Unlike the four other banks, JP Morgan (JPM.N), Citigroup (C.N), Barclays (BARC.L) and Royal Bank of Scotland (RBS.L), which are expected to plead guilty to criminal charges later on Wednesday, UBS has not been charged because it was the first bank to report the misconduct to the U.S. Department of Justice ().

It also escaped any fine from the DOJ on the forex issues.

Instead, the Swiss bank will have to plead guilty to one count of wire fraud and pay a $203 million fine for its role in rigging the interbank offered rate (Libor) after its involvement in the forex debacle breached an earlier agreement it had with the DOJ.

The bank is now under a three year “probation” period with the DOJ.

The bank said the new fines, which were much lower than expected, would not affect its earnings. Overall, UBS has paid out $2.84 billion over attempted manipulation of the forex market and interest rate benchmark Libor. The bank’s shares rose over 2 percent in early trade in a relief rally.

“It couldn’t have been better … Most of it was already priced in but something around $1 billion was expected, including the Libor fee,” Andreas Brun, an analyst with , said.

BARCLAYS

In the settlement later on Wednesday, JPMorgan and Citigroup are expected to be the first major U.S. banks to plead guilty to criminal charges in decades. It would be unprecedented for the parent companies or main banking arms of so many major banks to plead guilty to criminal charges in a coordinated action.

Britain’s Barclays is also expected to reach settlements with other British and U.S. regulators, which means its penalties could be significantly higher than the other banks and top $2 billion.

Barclays has set aside $3.2 billion to cover any forex fines, and other banks also have provisions for settlements.

Individuals at Barclays could also be held accountable if there is evidence of bad conduct, ’s banking regulator told Reuters on Tuesday, echoing a warning he made last week.

Britain’s Financial Conduct Authority and some U.S. authorities fined a group of six banks $4.3 billion in November for forex manipulation, but Barclays did not join that deal due to complications with its regulator in New York.

The impact of guilty pleas by the parent companies or main banking arms of major banks is uncertain, and could jeopardize their U.S. operations.

The banks are seeking assurances from U.S. regulators they will not be barred from certain businesses if they plead guilty, several sources familiar with situation said.

The DoJ has been negotiating with the banks for months over how to resolve the forex allegations. Transcripts of online chat rooms made public in November showed how traders shared confidential information about client orders and otherwise conspired to benefit their own transactions.

(Additional reporting by Steve Slater. Writing by Carmel Crimmins. Editing by Jane Merriman)

 

 

 

 

Add a Comment

Your email address will not be published. Required fields are marked *


*