LONDON (Reuters) - Hefty fines and tough new rules will discourage the Libor rate rigging seen at Swiss bank UBS and other banks - even if some traders will always be motivated by greed, a top UK regulator said on Wednesday.
Tracey McDermott, head of enforcement at the Financial Services Authority (FSA), said big fines had an impact on the status, reputation and credibility of banks, both in the UK and overseas.
“There will always be some people who are motivated by greed to do the wrong thing,” she said.
“But I think the combination of a new, much more robust framework (of rules), the increased emphasis and understanding of the issues by the firms and the fact people will be seeing these sanctions will significantly impact on how anybody would be tempted to do this.”
The FSA, jointly with Swiss and U.S. regulators, earlier on Wednesday hit UBS with a $1.5 billion fine — the second highest penalty ever slapped on a bank — for manipulating the London interbank offered rate (Libor) over six years to 2010.
McDermott said the FSA was investigating “a number of individuals” in relation to the UBS case, but she declined to elaborate.
In a move to strengthen its armory, Britain approved a new financial services law on Wednesday to make the rigging of Libor and other market benchmarks a criminal offence from next April - with tougher penalties.
However, the law will not be applied retroactively, meaning the FSA will have to continue fining on the basis of breaches of general conduct principles.
The FSA has said it is focusing its investigations on seven financial institutions, but McDermott warned against assuming there would be five more fines after the UBS settlement and a similar, if much smaller, Barclays fine in June.
“We can’t say until we conclude our investigations whether or not people will be fined because not necessarily every investigation ... will result in penalties,” she said.
But she added: “We are beginning to focus significant resources on Libor and I’m fairly confident in saying there will be more cases - but I can’t give you precise numbers.”
Royal Bank of Scotland is expected to settle allegations of Libor rigging by February.
The FSA is juggling a number of Libor probes alongside U.S., European, Canadian and Japanese peers, but McDermott said she did not anticipate any reduction in the amount of resources devoted to enforcement generally.
Editing by David Cowell