Will This Fine Be a Heavy Blow to UBS?
For its part in rigging Libor interest rates, UBS (NYSE:UBS) will likely be fined $1.5 billion. While a settlement is not expected to be reached between the bank and U.S., British, and Swiss regulators before Wednesday, sources familiar with the deal told Reuters that the Swiss bank will admit that 36 of its traders manipulated the yen Libor between 2005 and 2010.
This will be the second-largest fine to be levied against a bank; HSBC (NYSE:HBC), which was penalized $1.92 billion for money-laundering last week, recorded the highest charge in history.
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How Much will this Admission Hurt UBS?
As Reuters reported on Monday the penalty, would have “only a limited financial impact on UBS,” as the bank earned $4.59 billion in net profit last year and has increased its capital levels throughout 2012 by eliminating risky assets. Even though the $1.5 billion is expected to cut 50 basis points of UBS’s capital ratios, Kepler Capital Markets analyst Dirk Becker has estimated that it will still be better capitalized than other banks after the fine, according to the publication.