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Exclusive: UBS Chairman proposes industry-wide settlement over Libor

Chairman of Swiss bank UBS Axel Weber adjusts his glasses during the annual World Economic Forum (WEF) meeting in Davos January 23, 2013. RE
Chairman of Swiss bank UBS Axel Weber adjusts his glasses during the annual World Economic Forum (WEF) meeting in Davos January 23, 2013. RE

By Alexander Smith

DAVOS, Switzerland (Reuters) - UBS Chairman Axel Weber raised the possibility of an industry-wide settlement for the rest of the banks involved in the Libor rate fixing scandal at a meeting of top bankers in Davos, sources familiar with the matter said.

Among the top bankers and officials present at the meeting on Thursday were Bank of Canada Governor Mark Carney, JP Morgan Chase Chief Executive Jamie Dimon, Citigroup CEO Mike Corbat and HSBC Chairman Douglas Flint. Carney is due to take over as head of the Bank of England later this year.

Swiss bank UBS reached a $1.5 billion settlement in December with U.S. and British regulators over its role in the manipulation of the London interbank offered rate, a benchmark used for trillions of dollars of financial instruments ranging from home loans to complex derivative products. It was the second bank to settle, after Britain's Barclays.

U.S. British and other regulators are investigating more than a dozen global banks over manipulating the rate, which is compiled from data banks submit about how much interest they are charged for loans from other banks.

Weber used the meeting of bankers at the annual World Economic Forum in the Swiss Alpine resort to argue that an industry-wide settlement - similar to deals which have been struck with U.S. regulators in the past - would prevent further reputational damage to the industry.

One of the sources said that although the idea was discussed briefly during the meeting, there was no agreement on pursuing it. UBS declined to comment on the meeting, which was held in private. The sources spoke on condition they not be named.

Details of the rigging of the Libor rate in settlements reached with UBS and Barclays provoked public and political outrage. In the case of Barclays, fined $450 million, it led to the departure of its chief executive and chairman.

Britain's Royal Bank of Scotland is expected to become the third bank to reach an accord, with a deal involving a financial penalty of up to 500 million pounds expected within days or weeks, sources have said.

Other banks being investigated include Deutsche Bank, Citigroup, HSBC and JPMorgan.

A group settlement was considered last year, people familiar with the banks' thinking told Reuters at the time, but the idea was not pursued because it was deemed too complicated to achieve.

Some banks were keen to pursue a group deal with regulators rather than face a Barclays-style backlash by going it alone.

The sources last year said discussions about a group settlement initially took place before the Barclays agreement, and picked back up in the aftermath, following the severity of the reaction to Barclays.

For banks, a collective agreement would reduce the risk that any individual bank will be singled out and face a particular backlash. A group agreement could appeal to financial watchdogs because they would be able to announce a headline-grabbing figure and show that they were dealing firmly with the banking industry's misdemeanors.

The main obstacles facing a group settlement are likely to be a hesitancy on the part of the investment banks to work together in the fevered atmosphere surrounding the Libor investigations, and the large number of regulators involved in investigating cases.

Since the Barclays settlement, talks to reach agreements with banks have become more complex and bogged down by legal issues, banking sources have said.

(Reporting by Alexander Smith,; Financial Industry Editor; Editing by Steve Slater and Peter Graff)

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