UBS nearing agreement over Libor rigging: reports

Switzerland- based, UBS AG is nearing an agreement that would see it pay over $1 billion to resolve allegations that it tried to rig interest-rate benchmarks to boost trading profits, The Wall Street Journal quoting sources.

The lender and global regulators are on track to announce a settlement as soon as early next week, according to the people. They cautioned, however  that the discussions were still in progress and that the parties previously had been there before but failed to clinch a deal.

Even as they remain wary of the fallout of settling on their reputation, UBS executives are hoping that with the resolution of the rate-rigging allegations, they would close a difficult chapter for the bank.

A settlement would see the sanctions against UBS more than double the roughly $450 million that Barclays paid to settle similar allegations in June.

The expected enforcement action would extend across three continents into allegations that banks rigged the London interbank offered rate and other benchmarks impacting hundreds of trillions of dollars in loans, derivatives and other financial contracts globally.

Libor is worked out on the basis of estimates submitted by banks of their borrowing rates for different currencies and periods. Banks are facing accusations of submitting false estimates and acting in concert with each with a view to manipulate the rates. Over a dozen other banks are under investigation by authorities in the US, UK and elsewhere.