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LIBOR manipulation


UBS and Credit Suisse targeted by US regulator




Swiss bankers continue to feel the pressure (Keystone)

Swiss bankers continue to feel the pressure

(Keystone)

A US federal financial regulator, the National Credit Union Administration (NCUA), has filed a lawsuit in the federal district court in Kansas against 13 international banks, including Switzerland’s UBS and Credit Suisse.

In a statement on Monday, the NCUA alleged violations of federal and state anti-trust laws by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system, the benchmark for setting interest rates around the world.

It claimed the manipulation of LIBOR resulted in a loss of income from investments and other assets held by five failed corporate credit unions: US Central, WesCorp, Members United, Southwest and Constitution. 

“We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions,” said NCUA board chairman Debbie Matz.

“Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions.”

The NCUA claims the defendants in the action individually and collectively gave false interest-rate information through the LIBOR rate-setting process “to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled”.

It is alleged that the false information created the impression that the defendant banks were borrowing money at a lower interest rate than they were actually paying.

Ongoing saga

More than 40 suits have been filed in relation to the LIBOR manipulation. The NCUA is one of the first US federal financial regulators to sue in this area.

Last week, a UBS Japanese investment banking subsidiary was fined $100 million (CHF91 million) by a US judge for its role in manipulating the rate system.

UBS Securities Japan had pleaded guilty on December 19, 2012 to secretly manipulating benchmark interest rates, and had signed a plea agreement with the United States government in which it admitted its criminal conduct.

In addition, UBS, the parent company and Switzerland’s biggest bank, entered into a non-prosecution agreement with the US government requiring it to pay an additional $400 million penalty.

swissinfo.ch and agencies



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