Jerker Johansson, a former head of UBS AG’s investment bank, said his unawareness of rigging of global interest rates at the biggest Swiss bank was a failure and negligent.
“I would describe it as a failure,” Johansson, who headed the unit from March 2008 until April 2009, told the U.K.’s parliamentary commission on banking standards in London today. He agreed with the description from Andrew Tyrie, the commission’s chairman, that it was also negligent.
Huw Jenkins, who headed the unit before Johansson, and former chief executive officer Marcel Rohner told the hearing that they were “shocked” to hear about the misconduct, for which UBS was fined $1.5 billion by regulators in the U.S., the U.K. and Switzerland in December. Johansson, Jenkins, Rohner and Alexander Wilmot-Sitwell, who co-headed the investment bank for 1 1/2 years until November 2010, all said they learned of the rigging only recently from press reports.
The UBS settlement is the second in the investigation of global interest rates after Barclays Plc in June agreed to pay 290 million pounds ($466 million). Regulators have sought information from more than a dozen banks that set rates in the U.S., Europe and Japan to make their finances appear healthier. More than $300 trillion of loans, mortgages, financial products and contracts are linked to Libor.
“I’m deeply sorry that we didn’t spot this,” said Jenkins, CEO of the investment bank until October 2007. “It’s clearly a failing in our systems and controls and in our culture that it wasn’t highlighted through whistle-blowing or other checks and balances in the system.”
Andrea Orcel, CEO of the investment bank, told the commission yesterday that UBS is in the process of rooting out “negative elements” of its corporate culture. About 18 people have lost their jobs and the bank has “taken action” against 40 people in connection to the Libor probe, Andrew Williams, global head of compliance at UBS, said yesterday.
Johansson, who was in charge when UBS conducted an internal investigation into Libor setting, said he wasn’t aware of that probe at the time. He also said he was unaware of press reports highlighting problems.
“With hindsight, I wish I would have looked into it and I accept that,” he said. “But I honestly don’t know how at the time that could have been seen to be one of the most critical issues for the head of the investment bank, not knowing of the irregularities that were taking place in that setting mechanism.”
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.