UBS Faces $1 Billion Fine Over Libor



December 13, 2012 / David Enrich and Jean Eaglesham / WSJ

UBS AG UBSN.VX +0.60% is in the final stages of negotiating a settlement with U.S. and British authorities in which the giant Swiss bank is likely to pay more than $1 billion to resolve allegations that it attempted to manipulate benchmark interest rates, according to people briefed on the negotiations.

UBS and the authorities are currently on track to announce the settlement early next week, these people said. They cautioned that the discussions are still in progress and that the parties previously have been near deals in the past, only to see them unravel.

The settlement would conclude long-running investigations of UBS being conducted by the U.S. Commodity Futures Trading Commission and Department of Justice and the U.K. Financial Services Authority, as well as Swiss regulators. The Justice Department granted UBS partial immunity in exchange for its cooperation, and UBS early last year became the first bank to disclose that it was under investigation.

The probes cover attempted manipulation of the London interbank offered rate, or Libor, and the euro interbank offered rate, or Euribor. Together, the two benchmark rates serve as the basis for interest rates on hundreds of trillions of loans, derivatives and other financial contracts worldwide.

A penalty of $1 billion or more against UBS would be more than double the roughly $450 million that Barclays BARC.LN +0.59% PLC agreed to pay to settle similar allegations in late June. UBS would be the second bank to settle the charges.

More penalties against other banks are on the horizon. In addition to UBS, more than a dozen other banks remain under investigation by authorities in the U.S., U.K. and several other countries. Royal Bank of Scotland Group RBS.LN -0.40% PLC has said it hopes to reach a settlement with multiple authorities by February.

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