UK: LIBOR Bulletin - January 2013

Last Updated: 29 January 2013
Article by James Cooper

Most Read Contributor in UK, October 2017

LIBOR manipulation press coverage

Investigations and regulator action

UBS has been fined USD 1.5 billion (approx. GBP 940 million) by US, UK and Swiss regulators for seeking to manipulate certain LIBOR currencies and EURIBOR. The fine is comprised of a USD 400 million penalty by the US Department of Justice, a GBP 160 million fine from the FSA and 59 million francs payable in disgorgement to the Swiss Financial Market Supervisory Authority. UBS will also pay USD 700 million in fines to the US Commodity Futures Trading Commission. A US Department of Justice news release indicated that UBS Securities Japan Co Ltd, a subsidiary of UBS AG, has agreed to plead guilty to one count of wire fraud in relation to the manipulation of benchmark rates. UBS Japan has signed a plea agreement and has agreed to pay a USD 100 million fine. UBS cooperated with law enforcement agencies in relation to the probe and UBS AG entered into a non-prosecution agreement with the US government. The FSA indicated that it would have imposed a penalty of GBP 200 million were it not for fact that UBS agreed to settle at an early stage in the investigation.

The FSA Final Notice indicates that breaches by UBS covered a number of issues including: UBS traders routinely making requests to individuals at UBS responsible for determining its LIBOR and EURIBOR submissions to adjust their submissions to benefit trading positions; colluding with interdealer brokers in co-ordinated attempts to influence Japanese Yen (JPY) LIBOR submissions made by other panel banks; corrupt brokerage payments being made to reward brokers for their efforts to manipulate the LIBOR submissions of panel banks; and colluding with individuals at other panel banks to get them to make JPY LIBOR submissions that benefitted UBS's trading position. The FSA Notice indicates that more than 40 individuals were involved in the internal requests to adjust submissions. UBS has stated that it has been proactive in improving its processes and procedures in order to ensure that the misconduct identified in its core markets does not occur again.

On 9 January, Andrea Orcel, the Chief Executive of UBS Investment Bank gave evidence to the Banking Standards Commission, as did Philip Lofts, the Group Chief Risk Officer and Andrew Williams, the Global Head of Compliance. The Telegraph reports that Orcel confirmed that there had been 18 sackings of traders guilty of "reprehensible behaviour" and that the scandal had stemmed from a small sub-set of traders. On 10 January evidence was given by a number of former UBS Investment Bank Chief Executive Officers who, according to reports, accepted that there had been a failing in systems and controls.

The Hong Kong Monetary Authority has announced that it is investigating possible misconduct by UBS in its rate submissions for the Hong Kong Interbank Offered Rate (HIBOR). The HKMA is working closely with other regulatory authorities.

Two former traders at UBS have been charged by US authorities with conspiracy to commit fraud and, in addition, one has been charged with wire fraud and a price-fixing violation. It is thought by commentators that the charges brought by US authorities may also lead to an extradition battle between the US and UK. The SFO announced that it had arrested three individuals in connection with the investigation into LIBOR manipulation in December.

Following the UBS fine of USD 1.2 billion, nine banks across Europe have now incurred fines totalling over USD 6 billion. It has been widely reported that RBS is likely to be the next lender to settle with regulators over allegations of rate-fixing and that RBS is nearing a deal with regulators from the UK, US, Japan and Singapore to settle claims that it manipulated benchmark rates.

It has been reported that RBS has successfully applied for the dismissal of a lawsuit filed in New York by South Korean bank Woori. Woori had claimed RBS had sold it USD 80 million worth of collateralised debt obligations secured by mortgage-backed securities, which it alleged RBS knew were risky investments. Woori had also alleged that the CDO investments and the returns on those investments were linked to LIBOR, and claimed that RBS had concealed its role in a scheme to manipulate LIBOR. US District Judge Harold Baer found however that RBS had made sufficiently robust disclosures about the risks associated with the securities and also that Woori, as a bank in its own right, had its own expertise to properly assess the risks involved. Woori has other lawsuits pending before the Manhattan federal courts against Citigroup and Bank of America.

The Financial Services Bill has received Royal Assent. As well as replacing the old tripartite regulatory system, the new Financial Services Act will bring LIBOR into regulation. It will make it a criminal offence to publish misleading statements in relation to benchmark rates such as LIBOR. The Act will come into force on 1 April 2013.

Canada's Investment Industry Regulatory Organisation (IIROC) has published the results of its review of the Canadian Dealer Offered Rate (CDOR) and has made a number of recommendations to strengthen the integrity of CDOR including: specified documented criteria for participation in the rate-setting process, explicit documentation regarding the definition, calculation methodology and transparency of CDOR and documented regulatory expectations for participants' supervision of rate-setting activity and controls.

Industry response

Dutch bank Rabobank, German lender BayernLB and Austrian Bank Raiffeisen have announced that they are withdrawing from the EURIBOR panel. The exit of the two banks from the panel follows similar moves by Citi and Germany's Dekabank last year. Rabobank has said that it is not considering withdrawing from the LIBOR panel.

Following the regulatory fines imposed on Barclays in June 2012 and UBS, it has been reported that investors are concerned about an impending wave of civil litigation, as customers seek redress through the courts. A number of lawsuits have already been filed in the United States, and an action was commenced in the UK in early 2012. It has also been recently reported that a property developer, against whom Deutsche Bank is bringing a claim in the UK courts for missed payments under an interest-rate swap, is seeking the court's permission to add allegations that Deutsche Bank was involved in LIBOR manipulation to his counterclaim. It has also been suggested in the press that Fannie Mae and Freddie Mac may have potentially incurred losses of more than USD 3 billion as a result of investments tied to LIBOR. It also been recently reported by Bloomberg that eight California counties and public entities have filed complaints alleging losses due to manipulation of the LIBOR rate.

The Financial Times has reported that the British Bankers' Association has made plans to introduce a new, two-pronged initiative to set up a consumer panel, which will hear and address concerns from the public, and also create an advisory panel, which will bring together business and other leaders to help formulate industry policies. The BBA has also said that it supports the idea for the creation of a Banking Standards Board.

The International Organisation of Securities Commissions (IOSCO) recently published a consultation paper on financial benchmarks. The policy paper identifies concerns over the manipulation of benchmark rates and identifies policy issues including the necessity of governance structures to ensure that no conflict of interest arises in the rate-setting process.

In addition, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have published the results of their work on EURIBOR. They indicate that they have identified significant weaknesses in the governance of the EURIBOR rate-setting mechanism and have proposed a number of principles for the benchmark rate-setting process. Recommendations made by ESMA and the EBA include that the Steering Committee should be made more independent, that the definition of EURIBOR should be clearer, and that the EURIBOR-European Banking Federation (EEBF) should assume responsibility for the quality of data submitted by banks and its governance and code of conduct improved and reinforced

Barclays coverage

Investigations and regulator action

It has been reported that staff at Barclays who have been implicated in the suit filed by Guardian Care Homes Ltd in the UK have asked the court for anonymity. The request followed an order by the High Court that Barclays disclose the names of over 200 individuals who had made LIBOR rate submissions, as part of Barclays' general disclosure obligations. A hearing will take place in late January to determine whether the staff can remain anonymous.


It has been reported that Barclays will rewrite its remuneration policy and reconsider its bonus scheme, following criticism that high bonuses incentivised executives to take unnecessary risks. It has been suggested in the press that pay levels will include consideration of the "social impact" of deals employees conclude. Much of the work will be done by Hector Sants, who will join Barclays later this month as its head of compliance. Mr Sants was recently knighted, in recognition of his efforts in guiding the FSA during the financial crisis in 2008.


At the end of last year the biggest news was the USD 1.5 billion fine imposed by a number of regulators on UBS in relation to its manipulation of LIBOR and EURIBOR rates. The FSA fine, which comprised GBP 160 million of this amount (and which would have been GBP 200 million had UBS not settled at an early stage), was the largest fine ever imposed by the FSA. The level of the fine, which was significantly higher than the Barclays settlement, reflected the fact that the FSA found extensive and widespread misconduct at UBS, including 2,000 requests for inappropriate submissions, an unquantifiable number of oral requests, and discussion of manipulation in chat rooms and group emails, which was not detected by Compliance or Internal Audit. All eyes will now turn to the RBS settlement with authorities, which it has been reported may be expected later this month or next. Commentators have suggested that the level of any fine is likely to lie somewhere between that of Barclays and UBS.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.