Swiss bank UBS AG agreed to pay fines in three different countries after admitting to rigging a benchmark interest rate on Tuesday. British and Swiss regulators fined the Swiss banking giant $1.5 billion for rigging a rate known as Libor – London Inter-Bank Offered Rate – used by big banks to lend money to each other.
Libor is used as a benchmark rate for trillions of dollars-worth of mortgages and loans. Its rate changes everyday and is set by the British Bankers’ Association based on the average borrowing rate of a dozen of banks. UBS was found guilty of lowering and increasing the Libor rate to raise money on the financial market.
As the BBC reports, UBS will have to pay fines in three different countries for the scam. The US Department of Justice and the Commodities Futures Trading commision will receive $1.2 billion. The UK’s Financial Services Authority, or FSA, will get £160m ($260m) while the Swiss Financial Market Supervisory Authority will get paid 59m Swiss Francs ($80m).
According to the Associated Press, much of the Libor rate rigging took place in Japan. In a statement, the UBS boad wrote that some of its had “colluded with employees at other banks and cahs brokers to influence certain benchamrk rates to benefit their trading positions”.
UBS AG CEO Sergio Ermotti said in the statement that the misconduct of some of its empoyees hurt the bank’s reputation. “No amount of profit is more important than the reputation of the firm, and we are committed to doing business with integrity,” said Ermotti.