Swiss bank UBS is facing fines up to $1 billion

UBS which is Switzerland’s biggest bank is facing fine of more than $1 billion by the US and UK Regulator for trying to manipulate global interest rates. Such a penalty will be more than the one paid by British bank Barclays in June by the US and British regulators. In addition UBS will be the third big European bank being hit with fine by the US this week.

“The global settlement is about $1 billion. It's expected early next week, on Monday or Tuesday," the source said. UBS declined to comment.

UBS declined to comment. Britain's Financial Services Authority and the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) all declined to comment as well. 

Global authorities are investigating more than a dozen banks accused of altering submissions used to set benchmarks such as the London interbank offered rate to profit on interest-rate derivatives to manipulate the big banks’ financial health. Barclays, the U.K.’s second-biggest bank, settled to pay a fine $467 million in June to resolve the U.S. and U.K. Libor probes.

The fall out pushed Barclays CEO and chairman to quit and caused a public outcry in Europe and around the world on banking policy and ethics.

The probe has already brought a few arrests in the UK last week.

UBS the Swiss giant suffered a lost of $2.3 billion of unauthorized trades by one of its former trader who was later sent to jail for 7 years. The loss caused the Swiss banking giant to cut thousand and jobs and caused a management upheaval. Following this big loss, UBS is now facing a big fine from the UK and the US.

"I'm not sure how much more reputational damage can be done to UBS," said Chris Wheeler, analyst at Mediobanca in London. "They are rebuilding that slowly, but it won't help the wealth management business when you see this as a headline."

Banks tend to settle with authority to minimize damage and salvage some credibility in front of the public and politicians.

We all can remember how big banks were said to be to big to fail. Big banks enjoyed being bailed out while small businesses were allowed to crumble due to poor decisions made by those banks. Now it seems as if those banks have forgotten the crisis, it seems as if they have forgotten who provided the much needed cash infusion when it was needed, they forgot that they owe to the public to increase their standard and relinquish they need for reckless financial behavior that almost sent the world economy into a drain.

Luckily for those banks, they have politicians on their sides, lobbyists who will always find a way to get them what they need and pull them out of troubles. Unfortunately the smaller employees at those banks are face with layoffs, pay cut and loss of bonuses. The damages will spilled over to consumer since banks might try to recoup their losses by increasing fees.

The culture of financial recklessness cannot continue but unfortunately, it seems as if it is part of the financial system.

This article was written by Kadjolo Couliably managing partner at KDL Financial LLC