LONDON/ZURICH, Jan 10 (Reuters) - The former chief executive
of UBS denied on Thursday he was at fault for failing
to spot an "epic" interest rate scandal at the Swiss bank
despite a former colleague admitting management negligence.
UBS was fined a record $1.5 billion last month for
manipulating Libor interest rates, the latest in a string of
scandals including a $2.3 billion rogue-trading loss and a tax
avoidance row with the United States that have shredded the
group's once venerable reputation.
Marcel Rohner said he was "shocked" and "ashamed" when he
read about the rigging of Libor interest rates but he said
during his period as CEO he was trying to save the bank from
collapse and was unaware of the misconduct.
"I did the best I could," the Swiss national told a British
Rohner was CEO for 20 turbulent months between 2007 and
2009, when UBS repeatedly had to tap shareholders for cash as it
amassed more than $50 billion in mortgage write-downs. He has
not gone back to full-time work since.
Rohner, along with three other former UBS executives,
admitted to the committee that they first heard about the bank's
role in Libor manipulation in press reports in 2011 despite all
four of them being in charge of the investment banking unit for
part of the period when the rigging occurred.
Lawmakers blasted the four executives for "blissful
"I'm struggling to see how something of this scale and this
central was off radar," Susan Kramer, a member of the committee,
The British financial watchdog said interest rate rigging
was so widespread at UBS that every submission it made over a
six-year period from 2005 to 2010 inclusive was suspect.
Libor, the London interbank offered rate, is used as a
benchmark for pricing trillions of dollars of loans. Even small
inaccuracies in the rate affect investment returns and borrowing
costs meaning that UBS and other banks implicated in the rigging
scandal are at risk from civil lawsuits.
Under persistent questioning, Jerker Johansson, who headed
the investment bank for just over a year from 2008, admitted
that management had been negligent not to detect the misconduct.
Investigations by British, Swiss and U.S. regulators
revealed interest rate manipulation on what the U.S. authorities
called an "epic" scale. UBS brokers and managers conspired with
brokers to rig the rates to make money and openly boasted about
what they were doing in emails and electronic chatrooms. Five
internal audits failed to detect what was going on.
More than a dozen banks are under investigation in the Libor
probe and further settlements with regulators are expected this
year. Barclays paid a fine of $453 million for its role
in the interest rate manipulation last year.
Thomson Reuters, parent company of Reuters, has been
calculating and distributing Libor rates for Libor's sponsor,
the British Bankers' Association, since 2005.