Gravy train of Libor settlements


Barclays was first out of the gate with a deal to settle charges that it manipulated the process that set the Libor rate.

It inked a deal to pay $450 million this summer to U.S. and British authorities. It got off light in some respects, because it was cooperating with investigators and had conducted an extensive internal investigation. Next up to settle is UBS, which will likely be asked to pay much more than $450 million even though it has limited immunity agreements in place. It has also been cooperating with the probe.

The settlement negotiations have been on-going for at least six months, but they have reached the point where media leaks are taking place. A settlement announcement could come as early as this week, or it could be coming next month. More settlements will follow, as just about all major banks that participated in the Libor process are pondering settlements.

RBS may be the third bank to settle with regulators. It recently said it hopes to begin the dialogue soon. Reuters notes that Morgan Stanley has estimated that 11 global banks linked to the Libor scandal could face up to $14 billion in regulatory and legal settlement costs through 2014. More banks will start reserving against this fairly soon.

For more:
- here's the article
- here's a Financial Times article

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