* Probe found 133 traders tried to rig rates
* UBS, ING, RBS must set aside most in reserves
* Banks to start basing benchmarks on traded prices
By Rachel Armstrong and Kevin Lim
SINGAPORE, June 14 Singapore's central bank
censured a record 20 banks on Friday after it found more than
100 traders in the city state tried to rig key borrowing and
The probe by the Monetary Authority of Singapore (MAS) marks
the latest development in a global crackdown on rate-rigging and
adds more banks, including ING and Bank of America
, to the list of lenders involved.
The watchdog said 133 traders had tried to inappropriately
influence the rates. It did not fine the banks, but ordered them
to set aside additional reserves for a year.
The city state's banking and market associations also
unveiled reforms of how banks will set the benchmarks, including
basing some of them on actual trades rather than estimates
submitted by banks. Europe and the United States are also
pushing for benchmark rates to be based on actual trades.
Financial market reference rates are under intense scrutiny
around the world following the discovery that some had been
rigged, most notably the Libor -- London Interbank Offered Rate
-- benchmark for interest rates.
Barclays was the first bank to be fined for Libor
manipulation, and U.S. and UK authorities have slapped fines of
hundreds of millions of dollars on Royal Bank of Scotland
and UBS and are investigating more banks.
The regulatory focus has now expanded to the foreign
exchange market. Britain's financial watchdog is looking into a
report that traders manipulated benchmark foreign exchange
The Singapore watchdog ordered UBS, RBS and ING to set aside
the most in additional reserves, with each having to post
between S$1 billion ($800 million) and S$1.2 billion extra with
the central bank. The money will be returned if the banks take
the required remedial action.
REVIEW EXPANDED TO FOREX
The regulator said of the 133 traders found to have acted
inappropriately, three quarters had either been fired or
resigned. The remainder would be subject to disciplinary action,
including forfeiting their bonuses.
UBS said these were the actions of a few in the past. A UBS
spokesman said it had significantly strengthened its internal
procedures and controls.
ING said it had taken disciplinary action against the small
number of individuals involved. RBS said it would comply with
any required remedial measures.
Other banks censured included BNP Paribas, Bank of
America, Oversea-Chinese Banking Corporation, Barclays
, Credit Suisse, DBS, Deutsche Bank
and Standard Chartered.
"The punishment is not light. It is a good reminder to banks
to keep their governance in order. The opportunity cost of not
lending the money can be quite hefty," said Roger Tan, CEO of
SIAS Research, the equity research arm of the Securities
Investors Association (Singapore).
The Singapore regulator first ordered banks in the
city-state to review benchmark borrowing rates nearly a year
ago. That review was extended in September last year to foreign
exchange benchmark rates used to price currency derivatives,
particularly instruments known as non-deliverable forwards.
Reuters reported in January how the banks' investigations
had found evidence that traders were manipulating rates in the
offshore foreign exchange market.
Singapore's two main lending benchmarks, the Singapore
Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR) are
used to price mortgages and other types of loans.
The Singapore Foreign Exchange Market Committee and the
Association of Banks in Singapore announced that the U.S-dollar
linked version of Sibor would be scrapped, with banks relying on
U.S.-dollar Libor instead.
It also said that, while Singapore dollar Sibor would
continue to be based on banks' estimates of borrowing costs,
other benchmark rates, including the SOR, the Indonesian rupiah
and the Thai Baht would now be based on traded prices.
Benchmark rates for the Malaysian ringgit, Vietnamense dong,
and swap offer rates for the Indonesian rupiah and Thai baht
will be scrapped.
Thomson Reuters, the parent company of Reuters News,
calculates and distributes the benchmark rates for the
Association of Banks in Singapore.