HKMA investigates UBS


HONG KONG: Hong Kong's de facto central bank said it would probe UBS over possible rigging of the financial hub's interbank rate, a day after the Swiss giant agreed to pay a huge fine over the Libor scandal.

The Hong Kong Monetary Authority (HKMA) said that it had received information from overseas regulators about “possible misconduct” by UBS involving submissions for the city's interbank offered rate, known as Hibor, and other reference rates in Asia.

“The HKMA has commenced an investigation with a view to ascertaining any misconduct committed by the bank in relation to Hibor submissions,” it said.

The HKMA added that it would assess whether the potential misconduct had any material impact on the Hibor rate, considered a key benchmark interest rate in the wider Asian economies.

It also said it would work with overseas regulatory authorities to gather information and “consider further actions that need to be taken” pending the findings of the investigation.

In an emailed statement to AFP, a Hong Kong-based spokesman for UBS said: “We continue to work closely with various regulatory authorities to resolve issues relating to the setting of certain global benchmark interest rates.

“As we are currently in active discussions with these authorities, we cannot comment further.”

UBS agreed on Wednesday to pay US$1.5bil in fines the second-largest banking fine ever to national regulators in three countries to settle accusations that it tried to manipulate interest rates.

The probes by Swiss, British and US regulators revealed evidence of massive misconduct in the setting of the London interbank offered rate (Libor), a global reference that affects products from student loans to mortgages.

UBS said the settlement, equivalent to almost 1.2 billion euros, would likely push it into a net loss of between 2.02.5 billion Swiss francs (US$2.2bilUS$2.7bil) in the fourth quarter.

Two former UBS traders were also charged with conspiracy by US authorities.

The deepening Libor scandal threatens over a dozen other banks, with British bank Barclays agreeing in June to pay 290 million (US$471mil) to British and US regulators to settle charges related to manipulation of rates.

Several other banks are reportedly in talks with regulators, including Royal Bank of Scotland and Deutsche Bank.

“It's time for them to clean up their act,” analyst Francis Lun from Hong Kong financial services firm Lyncean Holdings told AFP on the latest investigation against UBS.

“Everyone now knows that all the major banks actually manipulated the interbank (Libor) rates,” he said.

The Libor is used as a benchmark for global financial contracts worth about US$300 trillion.

The UBS fine is the second highest to hit a bank, after HSBC paid US$1.92bil earlier this month to US authorities to settle allegations of money laundering. - AFP

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