UBS AG (UBSN) is in the process of rooting out “negative elements” of its corporate culture after Switzerland’s largest bank was fined $1.5 billion by regulators for trying to rig global interest rates, said Andrea Orcel, chief executive officer of the investment bank.
“We all got probably too arrogant, too self-convinced the things were correct the way they were -- I think the industry has to change,” Orcel, 49, said at a parliamentary hearing on Libor in London today. “There were certainly elements of our culture that were negative and that need to be rooted out and elements of our culture that we didn’t understand.”
The UBS settlement is the second in the investigation of global interest rates after Barclays Plc (BARC) in June agreed to pay 290 million pounds ($466 million). Regulators have sought information from more than a dozen banks that set rates in the U.S., Europe and Japan to make their finances appear healthier. More than $300 trillion of loans, mortgages, financial products and contracts are linked to Libor.
UBS rose 2.6 percent to 15.48 Swiss francs at 12:24 pm in Zurich. The shares have gained 45 percent over the past year.
Orcel said the staff involved in manipulating Libor were “dismissed, penalized or reprimanded.” About 18 people have lost their jobs and the bank has “taken action” against 40 people, said Andrew Williams, global head of compliance at UBS.
Williams also told lawmakers the impact former trader Tom Hayes, one of two UBS traders charged by prosecutors, had on the business “is currently being studied” and that he wasn’t affected by claw-backs because “all his deferred compensation was forfeited” when he joined Citigroup Inc. (C) He “wouldn’t have had anything to claw back,” he added.
“Clearly his conduct was reprehensible and we are all disgusted by it,” he said at the hearing.
Hayes joined UBS in 2006 and worked at the Swiss lender until 2009, when he joined Citigroup. He was dismissed by Citigroup less than a year later for involvement in suspected rate-rigging, a person with knowledge of the matter said.
UBS, based in Zurich received conditional immunity for cooperating with the U.S. Justice Department’s and Swiss Competition Commission’s antitrust investigations into submissions of yen Libor and Euroyen Tokyo interbank offered rate, or Tibor. The Canadian Competition Bureau also granted the bank conditional immunity in its investigation into yen Libor, while the Swiss commission granted immunity on Swiss franc Libor and certain transactions related to it.
Orcel told lawmakers while the bank has “addressed some issues,” “I can’t tell you that it won’t happen again.”
“I’m convinced that we made a lot of progress and I’m also convinced that we need to do more,” Orcel said. “I guess it’s a journey where the whole executive board are very focused at recovering the honor and standing the organization had in the past.”
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