UBS could incur further 'material' FX penalties

UBS sign

UBS has said it may be hit with 'material' penalties after authorities investigating alleged manipulation of foreign exchange markets started settlement talks.

'The terms proposed include findings that UBS failed to have adequate controls in relation to its foreign-exchange business that were adequate to prevent misconduct,' the bank said Monday in a offer prospectus to shareholders. It didn’t identify the regulators involved.

Bloomberg News reports that the U.K.’s Financial Conduct Authority is in talks with banks including Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. and UBS to settle investigations into allegations of currency benchmark rigging as soon as November, people familiar with the probes have said. Fitch Ratings said in a statement on Sept. 15 that uncertainty over fines and possible restrictions is 'one of the biggest risks' for banks, when calling potential penalties on misconduct 'material and widespread.'

'Foreign exchange is one of the big remaining issues' for UBS, saidDirk Becker, a Frankfurt-based analyst at Kepler Cheuvreux with a hold recommendation on the shares. 'Settling early would probably be a good idea.'

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