Skiplink Navigation

Main Features

Libor rigging Ex-UBS bosses accused of negligence, ignorance

Marcel Rohner, former group CEO of UBS, arriving at Portcullis House in London to testify


British lawmakers have accused former UBS bosses of “gross negligence” and ignorance for not being aware of interest rate rigging at the bank, which culminated in a SFr1.4 billion ($1.5 billion) fine last year.

Marcel Rohner, the former chief executive officer of Switzerland’s largest bank, told a British parliamentary committee investigating banking standards that he was “shocked” and “ashamed” when he learned about the rigging. He did not, however, consider his leadership negligent and was unaware of any misconduct because his focus at the time was to save the bank from collapse.

“The times I was leading this institution were so extreme I was fighting permanently for survival,” Rohner told the Parliamentary Commission on Banking Standards (PCBS) on Thursday, adding that he had done the best he could at the time.

Rohner and three other former UBS executives claimed that the first time they had heard of the bank's involvement in rigging the London interbank rate was from press reports in 2011 – despite the fact that they had been in charge of the investment banking when the manipulation took place.

Out of depth

“The level of ignorance seems staggering to the point of incredulity,” said Andrew Tyrie, the head of the panel which was set up in the aftermath of the Libor scandal. “You were out of your depth.”

More than a dozen banks are under investigation for rigging the benchmark interest rates; further settlements with regulators are expected later this year. British, Swiss and US regulators revealed interest rate manipulation at UBS on what the American authorities called an “epic” scale. Internal audits failed to detect the fraud, which apparently took place between 2005 and 2010, if not earlier.

The Libor is used as a benchmark for pricing trillions of dollars of loans. Even small inaccuracies in the rate affect investment returns and borrowing costs.

Jerker Johansson, who headed the investment bank for just over a year from 2008, admitted today that management had been negligent not to detect the misconduct. He said the manipulation was tantamount to stealing.

Rohner was CEO between 2007 and 2009, when UBS repeatedly had to tap shareholders and the Swiss state for cash to stem bankruptcy as the bank was forced to write down more than $50 billion worth of mortgages during the global financial crisis.

Lack of culture

UBS sprawled very quickly at the time and imported teams into the bank – teams which had cultures that were not in line with the bank’s ethics and standards, as Andrea Orcel, head of UBS investment banking since November, told the panel on Wednesday. Orcel said that the people involved in the scandal have been reprimanded, dismissed or penalised.

The Swiss bank now has to try to restore its reputation. UBS is cutting 10,000 jobs and closing much of its riskier fixed-income arm to focus on its more stable private banking business. Rohner said that the reputation of a services business like a bank depends more on the quality of its people than a manufacturing business does.

“UBS not only had a bad culture, it had a lack of culture,” Rohner told the panel. “The financial system was over-leveraged, which meant that very cheap funding was available for the investment bankers. The urge to grow rapidly was in many ways reinforced by short-term thinking. At that time, we hired a lot of people, some of them were mercenaries. You can’t build a culture like that.”

The government and the industry are expected to follow the panel’s recommendations on reforming the banking sector. and agencies


Neuer Inhalt

Horizontal Line

swissinfo EN

Teaser Join us on Facebook!

Join us on Facebook!

subscription form

Form for signing up for free newsletter.

Sign up for our free newsletters and get the top stories delivered to your inbox.

Click here to see more newsletters