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UPDATE 1-Hong Kong central bank raps UBS for role in Hibor fixing case
March 14, 2014 / 10:32 AM / 4 years ago

UPDATE 1-Hong Kong central bank raps UBS for role in Hibor fixing case

* HKMA finds no collusion between banks

* UBS says has active appropriate measures

By Michelle Chen and Denny Thomas

HONG KONG, March 14 (Reuters) - Hong Kong’s de facto central bank has rapped UBS AG for its role in the city’s benchmark lending rate fixing case and warned that it would consider additional supervisory actions in light of the Swiss bank’s compliance failures.

Marking the end of a 15-month investigation, the Hong Kong Monetary Authority (HKMA) said Friday it has found no evidence of collusion between banks to rig benchmark lending rates after going through messages and emails between 2005 and 2012.

But HKMA said it has uncovered material weakness in the way UBS submitted estimated Hong Kong Interbank Offered Rates to the city’s banking association.

“The HKMA found about 100 communication records during 2006-2009, in the form of internal chat messages, which contained change requests by several UBS traders to the UBS Hibor submitter with a view to rigging the Hibor fixing,” HKMA said in a statement.

The traders involved no longer work at the firm, a Hong Kong-based spokesman for UBS told Reuters, declining to say if they had quit on their own accord or had been asked to leave.

While HKMA estimates the UBS change requests had negligible impact on the actual outcome of the Hibor fixing, it said the Swiss bank’s failure to report its staff’s misconduct to the regulator was unacceptable.

UBS has been at the centre of global investigations into rate rigging. It was fined $1.5 billion in December 2012 by British and U.S. regulators for Libor manipulation, and in June 2013, was one given one of the stiffest punishments in Singapore for attempted manipulation of currency and lending rates in the city-state.

Evidence that UBS may have been involved in attempted rate rigging in Hong Kong materialised in December 2012, when U.S. financial regulators said their investigation into Libor manipulation by UBS had found evidence of possible misconduct by the bank in relation to Hibor.

“We have not been part of the Hibor fixing panel since 2010 and have taken appropriate steps to incorporate the HKMA’s suggested improvements into our operations,” UBS said in a statement.

The HKMA investigation was extended to include HSBC and a number of other banks in June 2013.

HKMA said in October that it was speaking to foreign regulators about possible manipulation of fixings in the spot foreign exchange market.

In June 2013, Singapore’s central bank reprimanded 20 banks after it found 133 traders had been involved in attempts to manipulate benchmark lending and currency rates in the city-state.

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