By John Letzing
ZURICH-- UBS AG became the latest global bank to plead guilty to
crimes in the U.S. and was slapped with $545 million in fines,
after authorities probing the manipulation of foreign exchange
rates tore up a three-year-old immunity agreement with
Switzerland's biggest lender.
Zurich-based UBS said on Wednesday it isn't being charged as
part of a broader foreign-exchange investigation, but that its
conduct prompted the Justice Department to void a separate
agreement struck in 2012 that spared the bank from charges related
to manipulation of the London interbank offered rate, or Libor.
UBS will plead guilty to wire fraud and pay a fresh $203 million
fine related to the Libor case. In addition, the bank will pay a
$342 million penalty to the U.S. Federal Reserve, for "engaging in
unsound business practices" related to its foreign-exchange
business.
The Wall Street Journal previously reported that U.S.
prosecutors took into account UBS's promise not to break the law in
its 2012 non-prosecution agreement for Libor, and believed
misconduct by bank's employees trading in foreign currencies
violated those terms.
A Justice Department spokeswoman didn't immediately respond to a
request for comment.
Banks have sought to avoid criminal charges, which can add
complications to their businesses. UBS rival Credit Suisse Group
AG, pleaded guilty last year to a charge of aiding U.S. tax evasion
by providing undeclared Swiss bank accounts to American clients.
Credit Suisse has experienced some wrinkles in its U.S. businesses
as a result of the plea, related to its ability to manage money for
pension funds and to quickly raise capital.
French bank BNP Paribas SA pleaded guilty last year to dealings
with sanctioned countries.
People familiar with the matter had previously been expecting
UBS and other banks to settle the foreign exchange probes with the
Justice Department last week. However, the banks need to apply for
waivers from the U.S. Securities and Exchange Commission in light
of their guilty pleas--which could help protect their businesses
from related complications--contributed to pushing the respective
resolutions back by one week.
UBS is expected to be one of a handful of big banks that are
soon to settle foreign-exchange rigging probes with the Justice
Department. Barclays PLC, J.P. Morgan Chase & Co., Citigroup
Inc. and Royal Bank of Scotland are expected to enter guilty pleas
related to the foreign-exchange probes.
UBS said it shouldn't suffer any financial impact on its results
for the second quarter as a result of Wednesday's settlements. The
bank's Chief Executive Sergio Ermotti and Chairman Axel Weber said
"the conduct of a small number of employees was unacceptable."
UBS noted in its statement that the conduct that prompted its
guilty plea related to Libor is the same that underpinned a guilty
plea made previously in the U.S. by the bank's Japanese
subsidiary.
Write to Neil MacLucas at neil.maclucas@wsj.com