[ by Howard Haykin ]

This past summer, Barclays became the first global bank to settle regulators' charges of interest rate manipulation.  The settlement initially cost the bank $452 million, but quickly escalated - not in monetary terms but in human tolls.  High ranking Barclays and British government officials were forced to resign in disgrace - including Barclays CEO Robert Diamond, Jr.

With UBS agreeing to pay fines totaling $1.5bn - more than 3 times as much as Barclays agreed to pay - the logical questions to ask are:

• Was UBS assessed so-called 'late penalties' because it trailed Barclays by about 6 months?  If so, what portion of the $1.5 billion in fines represented such 'late penalties'?

• Or, was the severity of UBS' fines influenced by the determination by regulators that the scope of participation in manipulation by UBS personnel far exceeded the level of manipulation by Barclays personnel?  
   

FSA Responds.   The British regulator says UBS's misconduct was more serious than that of Barclays, which paid $452 million over similar accusations this past summer.  Reuters' Felix Salmon gave a written reaction to the disclosures presented by the regulators, as follows:

"After the Barclays revelations, I actually thought that I couldn't be shocked about the extent of Libor manipulation. Boy, was I wrong."

C-I Note:  Refer to C-I's other Wednesday posts for further accounts of the UBS settlement.