Northern, WI 1/12/2013 (usmarketbuzz) – A precedent setting penalty of $1.5 billion was imposed on the UBS AG (USA) (NYSE:UBS) last month over charges of exploiting the Libor calculations. This was the last nail in the coffin of the largest Swiss bank after a $2.3 billion trading loss and accusations of tax avoidance by the US regulators.
British, American and Swiss regulators are investigating over a dozen banks for rigging, which remained unveiled even through five consecutive internal audits despite the fact the conspiracy was openly discussed on electronic communication channels by the bank managers and brokers. Further settlements could emerge by the end of this year. Barclays PLC (LON:BARC) has already paid $453 million in this behalf.
Three former Chiefs besides Marcel Rohner, the bank’s 48 year old Swiss CEO during 2007-2009, were accused of gross negligence and professional incompetence for the failure of the internal control system.
During the Thursday hearing before the Parliamentary Commission on Banking Standards (PCBS), Rohner, claimed he was unaware of the rigging as he focused “fighting ….for survival”, amid the liquidity crunch following a $50 billion mortgage related write off.The irregularity rooted from “a lack of culture” within the growing business hiring extensively from outside, he said. Another Ex-chief Jerker Johansson accepted that the exploitation was willful negligence, which amounted to stealing.
John McFallfrom the panel remarked the executives”knew that gambling was going on” but choose to complete their tenure and vacate their office in silence.
LIBOR a global benchmark measure of the returns on loans and investments around the globe. Thomson Reuters calculates and publishes it on behalf of the British Bankers’ Association. The British regulator stated the rigging was pervasive to the level that calls for a civil proceeding. The probe will cover all submissions between 2005 to 2010.
Rohner says profit-linked compensation should be introduced and the “dysfunctional” two-tier governance regime which imparts hold the supervising board solely responsible without imparting any operational authority should be abandoned.
Tyrie believes the PCBS’ recommendations due to be released by March end will touch upon “the governance, incentive structure and the overall supervisory approach” could trigger long-term change.
The company announced Wednesday, it will slash head count by 10,000 and divest from the fixed-income segment.
The UBS AG (USA) (NYSE:UBS) shares were up 0.82% to $17.29.
The Barclays PLC (LON:BARC) shares were up 1.18% to £298.08.
