By Alexander Smith
DAVOS, Switzerland, Jan 25 (Reuters) - UBS Chairman Axel
Weber raised the possibility of an industry-wide settlement for
the rest of the banks involved in the Libor rate fixing scandal
at a meeting of top bankers in Davos, sources familiar with the
matter said.
Among the top bankers and officials present at the meeting
on Thursday were Bank of Canada Governor Mark Carney, JP Morgan
Chase Chief Executive Jamie Dimon, Citigroup CEO Mike Corbat and
HSBC Chairman Douglas Flint. Carney is due to take over as head
of the Bank of England later this year.
Swiss bank UBS reached a $1.5 billion settlement in December
with U.S. and British regulators over its role in the
manipulation of the London interbank offered rate, a benchmark
used for trillions of dollars of financial instruments ranging
from home loans to complex derivative products. It was the
second bank to settle, after Britain's Barclays.
U.S. British and other regulators are investigating more
than a dozen global banks over manipulating the rate, which is
compiled from data banks submit about how much interest they are
charged for loans from other banks.
Weber used the meeting of bankers at the annual World
Economic Forum in the Swiss Alpine resort to argue that an
industry-wide settlement - similar to deals which have been
struck with U.S. regulators in the past - would prevent further
reputational damage to the industry.
One of the sources said that although the idea was discussed
briefly during the meeting, there was no agreement on pursuing
it. UBS declined to comment on the meeting, which was held in
private. The sources spoke on condition they not be named.
Details of the rigging of the Libor rate in settlements
reached with UBS and Barclays provoked public and political
outrage. In the case of Barclays, fined $450 million, it led to
the departure of its chief executive and chairman.
Britain's Royal Bank of Scotland is expected to become the
third bank to reach an accord, with a deal involving a financial
penalty of up to 500 million pounds expected within days or
weeks, sources have said.
Other banks being investigated include Deutsche Bank,
Citigroup, HSBC and JPMorgan.
A group settlement was considered last year, people familiar
with the banks' thinking told Reuters at the time, but the idea
was not pursued because it was deemed too complicated to
achieve.
Some banks were keen to pursue a group deal with regulators
rather than face a Barclays-style backlash by going it alone.
The sources last year said discussions about a group
settlement initially took place before the Barclays agreement,
and picked back up in the aftermath, following the severity of
the reaction to Barclays.
For banks, a collective agreement would reduce the risk that
any individual bank will be singled out and face a particular
backlash. A group agreement could appeal to financial watchdogs
because they would be able to announce a headline-grabbing
figure and show that they were dealing firmly with the banking
industry's misdemeanors.
The main obstacles facing a group settlement are likely to
be a hesitancy on the part of the investment banks to work
together in the fevered atmosphere surrounding the Libor
investigations, and the large number of regulators involved in
investigating cases.
Since the Barclays settlement, talks to reach agreements
with banks have become more complex and bogged down by legal
issues, banking sources have said.
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