UBS

You can question some of the life choices that Tom Hayes, a/k/a Trader A, UBS’s Libor-manipulating-est Libor manipulator, has made, but this seems to me inarguable:

Citigroup executives wooed him in June 2009 at a swanky bar in Tokyo. As they showered him with praise, say people who were there, Mr. Hayes rarely spoke, instead letting his girlfriend, a lawyer, answer questions.

Shady traders: date lawyers! And let them do all the talking for you.

That detail is from this amazing Wall Street Journal article about Hayes. When we last discussed Hayes and his totally open and casual requests to people he’d just met to manipulate Libor for him, I asked “is this: (1) all of these people did not fully realize that they weren’t supposed to be doing what they were doing, (2) UBS’s culture was one of complete lawlessness and fuck-around-ery, or (3) both of those things are true and reinforce each other?,” and per the Journal the answer is fascinatingly (3).

I’ve occasionally said that Hayes made a career of Libor manipulating but that’s not entirely right. He started at RBS and, per the Journal‘s account,1 spent his time there mainly being smart and dressing “like a college student — with washed out jeans, a polo shirt and sometimes a threadbare sweater” rather than IMing people to ask them to fix Libor. (That, at RBS, seems to have come later.) Then he moved to UBS: Read more »

Swiss bank annual earnings are here so we might as well check in on what they’re up to with comp. You and I may think of comp in pretty straightforward ways – if you did good, and your employer did good, you get paid well, and if not not – but Credit Suisse and UBS take a delightfully arcane wheels-within-wheels approach, constantly changing how they pay employees to send signals, fine-tune incentives, and optimize regulatory capital. I suppose if I worked there I’d be so pleased by the complexity of the edifice that I’d be okay with otherwise disappointing pay. Current employees may disagree.

Anyway we talked about UBS the other day; per the FT they are handing out bonuses in the form of high-trigger CoCo bonds that get written down to zero if UBS’s regulatory capital falls below 7 percent. The bonds “will pay a market-based interest rate” though that’s not saying much; any interest rate is “market-based” in the sense that it can be decomposed into, like, Treasuries plus a number. Presumably the number here is high.

Credit Suisse’s entry is out today and it is a bit of a retreat from previous years’ glories; here’s how CS describes it in its financial report: Read more »

It’s getting to be a struggle to be amused by Libor manipulation chats. RBS took its lumps today, and the CFTC and FSA orders are full of quotes, and you can read them in various round-ups, but, meh. Even Bart Chilton is bored; today’s imagery (“sends a signal to those who would monkey around with benchmark rates … much more than a slap on the wrist …”) is a letdown after his UBS masterpiece (“Financial sector violations are hurtling toward us like a spaceship moving through the stars”) just a few weeks ago. I get it! Everyone manipulated Libor! In writing! And then they were like “heh, fukin awexome man, u manipluated libor, gud work, i sexx u now, w champain.” Fabulous.1

Part of why RBS provides less delight than its predecessor Libor-settlers is that RBS made use of the oldest and most reliable way to avoid typos: not typing. From the CFTC order: Read more »

  • 16 Jan 2013 at 12:27 PM

Layoffs Watch ’13: UBS

Cuts are said to be going down in New York. Read more »

Is it just obviously true that if (1) you had a Libor-based loan or swap or whatever, (2) Libor was intentionally manipulated by a bank or a scheming cabal of banks, and (3) that manipulation moved Libor against you and cost you money, then (4) you should be able to sue those banks to get back that money? Maybe? But then what do you do about this?

The preliminary analysis of individual quotes from panel banks shows that some anomalies can be found in the submissions, despite Thomson Reuters sanity checks. These anomalies can be seen as fat finger errors. For example on 12 June 2004, Bank 30 provided quotes between 44% and 55.5% for all tenors, and on 14 August 2006, the same bank provided quotes of 66% for a range of maturities (1 week to 3 weeks and 2 months to 5 months) as indicated in Chart 2.

That’s from the European Banking Authority – European Securities and Markets Authority report and recommendations on what to do about Euribor, a slightly less corrupt Continental analogue of Libor overseen by the European Banking Federation. Euribor was not, you’ll be pleased to know, 44% for any tenor on any date in 2004, but some of these fat finger errors do seem to have moved Euribor, though by mostly trivial amounts. Read more »

UBS’s $1.5 billion settlement for manipulating interbank lending rates is the fourth separate regulatory finding against the Swiss group in as many years – underlining the failure of bank executives to reform the corporate culture…Just last month, a London jury convicted one of UBS’s former traders, Kweku Adoboli, of the biggest banking fraud in British history after he lost $2.3 billion in rogue trades. The FSA also fined the bank 29.7 million pounds ($39.2 million) for allowing the unauthorized trades. The trading loss is now seen among UBS staff as the new benchmark of wrongdoing, with reports of relief among employees that the bank’s $1.5 billion global Libor settlement was “only half an Adoboli.” [FT]

Not everyone would have the balls, but Adobli did and for that he deserved props. Read more »