US prosecutors may file charges against UBS bankers

The alleged rigging of Tokyo interbank lending rates by the Swiss lender UBS has left US prosecutors planning to file charges this week against bankers associated with the scandal, a person with knowledge of the case said yesterday.

The charges would be the first brought by the US department of justice against individuals alleged to have manipulated the London interbank offered rate, or Libor, and comparable lending rates in Europe and Japan.

The prosecution is slated to begin in tandem with an announcement that UBS Securities Japan, the Japanese unit of the bank based in Zurich, would plead guilty to manipulating Japanese interest rates starting in 2007, said the person, who asked not to be named.

UBS is set to pay as much as US$1.6 billion (Dh5.87bn) to settle charges of interest rate manipulation with the justice department, the US commodity futures trading commission, the UK financial services authority (FSA) and the Swiss financial market supervisory authority, said another person familiar with the investigations.

The announcement could come as early as tomorrow, said the person, who asked not to be identified.

That $1.6bn figure would be more than three times the £290 million (Dh1.72bn) Barclays agreed to pay in June to settle allegations its employees conspired to manipulate Libor, a rate used in bank borrowing.

Christoph Meier, a spokesman for UBS, Liam Parker, a spokesman for the FSA, and Tobias Lux, a spokesman for the Swiss financial markets regulator, declined to comment on the settlement amount.

"We continue to work closely with various regulatory authorities to resolve issues relating to the setting of certain global benchmark interest rates," Karina Byrne, a spokeswoman for UBS, said last week.

"As we are in active discussions with these authorities, we cannot comment further."

UBS has been "granted conditional leniency or conditional immunity" by the department's antitrust division, in connection with potential anti-trust violations related to submissions for interbank lending rates in Tokyo, according to the Swiss bank's most recent annual report.

Meanwhile, Royal Bank of Scotland is braced for a penalty of more than £350 million for its role in a global interest rate rigging scandal, The Sunday Times newspaper reported yesterday, without citing sources.

The British newspaper said part state-owned RBS was nearing a deal with regulators in Europe and North America over its part in the Libor scandal, and is expected to agree a settlement early next month.

RBS declined to comment.

* compiled from Reuters and Bloomberg News