UBS Fined for its Part in the Libor Rigging Scandal

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UBS Fined for its Part in the Libor Rigging Scandal

UBS Fined for its Part in the Libor Rigging Scandal



Another whopping banking fine has been dished out and Swiss giant UBS are once again paying the price for malpractice.

This time we are talking about the Libor rigging scandal that has seen some of the UK's banks pay hundreds of millions in fines and saw the scalp of the Barclays CEO only a few months ago.

It is likely that we will see more banks slapped on the wrist going forward, but today's fine certainly acts as a reminder that mismanagement and bad business practices has been rife over the years.

Of course, it also makes for more bad headlines, but this is something that the banking sector has almost got used to by now.

Nevertheless, whilst compliance procedures and business practices have been radically overhauled, many banks are still teetering on the brink.

They still hold some really ugly assets and, as Sir Mervyn King has been continually reminding us, many of them remain under capitalised.

Should another nasty shock came along, say in the form of a sudden dip in global growth or a worsening of the sovereign debt crisis, then a few Libor fines could be the least of our worries.

Despite all this, UBS's shares have not reacted too badly to the news as a lot of it had already been priced in and the bank remains better capitalised than most even after the fine.

For many investors, it's positive that the fine is at least out of the way and the bank can now move on with its restructuring program.

The banking sector's recent problems have also done little to stop the wider Christmas rally, which saw the Dow put on another triple-digit gain to 13,350.

The driver behind the gains is continued optimism that a deal on the fiscal cliff is nearing...

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By Simon Denham, 19 December 2012


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