Britain charges ex-UBS trader over Libor rate scandal

LONDON - British officials charged former UBS trader Tom Hayes on Tuesday, marking the first prosecution over the Libor rate-rigging scandal which rocked the banking sector last year with repercussions across the world.

"Tom Hayes, a former trader at UBS and Citigroup, has today been charged with offences of conspiracy to defraud in connection with the investigation by the Serious Fraud Office into the manipulation of Libor," the SFO said in a statement.

It said that Hayes had been charged by City of London Police at Bishopsgate police station in London with eight counts of conspiracy to defraud.

It was not clear whether the charges related to his time at Swiss bank UBS and/or US rival Citigroup.

In December, British, Swiss and US regulators fined UBS a total of 1.4 billion Swiss francs (S$1.9 billion) for having manipulated the Libor Interbank lending rate which determines a vast number of financial and interest rate contracts around the world.

An SFO spokeman declined to comment on which bank the charges related to, adding only that Hayes would appear before London's Westminster Magistrates' Court on Thursday.

The latest twist in the scandal comes after the British Bankers' Association last week announced changes to Libor interest-rate transparency in a bid to avoid a repeat of the damaging affair.

The BBA said that publication of banks' individual submissions of the Libor interbank lending rate would be embargoed for three months in a move aimed at avoiding renewed manipulation of the borrowing cost as occurred in the past.

It added that the change, which followed recommendations of a review initiated by the British government, would take effect from July 1.

The BBA is meanwhile to shortly lose its role of Libor rate-setter in the wake of the rigging crisis.

Libor is calculated daily, using estimates from banks of their own interbank rates. However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.

The Libor scandal erupted last year when Barclays bank was fined £290 million (US$470 million, 363 million euros) by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.

Royal Bank of Scotland has also received heavy fines over alleged rigging of Libor - a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.