UBS hints at expected fines in settlement of FX trading probe

Reuters is reporting out of Zurich that Switzerland’s largest bank UBS warned it faced new fines after confirming it was holding talks to settle allegations it was involved in rigging FX rates. UBS has started settlement talks with some of the investigating authorities, the bank said in a share-swap prospectus published on Monday.

Although UBS did not identify the regulators it was talking to – last week it was reported that the United Kingdom’s FCA was in discussions with banks on FX manipulation settlement, this is the first time we are hearing a bank comment back on the matter. UBS said in its prospectus that other authorities could start settlement talks “in the near future”.

Furthermore, it’s being reported that U.S. regulators, which traditionally levy far higher fines than their British counterparts, are not part of the UK negotiations. Stung by a previous scandal into manipulation of Libor which saw it pay out $1.5 billion in fines and penalties, UBS has tried to stay on top of the FX probe. It suspended at least five traders and approached U.S. authorities last year with information in the hope of gaining antitrust immunity if charged with wrongdoing.

UBS said it could face “material monetary penalties” in any deal struck. The FX probe is one of several legal headaches facing the bank as it shrinks its investment banking business. Reuters says the bank raised its provision against future litigation to 1.98 billion Swiss francs ($2.08 billion) earlier this year but has warned this might not be enough to cover possible fines and charges.

So far, more than 30 traders from various banks have been put on leave, suspended or fired in connection with the FX probe. No individual or bank has been formally accused of any wrongdoing – but it looks like this could be changing sooner now rather than later.

Read Also: