Hong Kong's financial regulator is investigating UBS over interbank interest rate allegations after the Swiss bank agreed to pay $1.53 billion to global authorities over the matter earlier this week.

Switzerland's UBS, which has agreed to pay global regulators a total of SFr1.4 billion (around $1.53 billion) for manipulating key interbank interest rates, is also under investigation by authorities in Hong Kong.

The Hong Kong Monetary Authority said it noted that foreign regulators have made statements about probes into UBS's alleged misconduct, such as rigging of the London Interbank Offered Rate, or LIBOR.

"The HKMA has also received information from overseas regulatory
authorities about possible misconduct by UBS involving submissions for
the Hong Kong Interbank Offered Rate (HIBOR) and other reference rates
in this region" the regulator said in a statement on its website. 

The Zurich-listed bank's record payment to settle the allegations have already drawn a bluntly-worded statement from the UK Financial Services Authority, the regulator. This week, the FSA said it had found at least 2,000 requests for inappropriate
interest rate submissions, as well as a number of emails and other
communications about the issue.

The rigging of LIBOR has already shaken confidence in London as a global financial centre, but the ripple effects of the scandal go far. The issue is significant as LIBOR and other reference rates are used to help calculate financial products such as mortgages and structured products. 

Loss expected

Zurich-listed UBS,
which had already suffered a $2.3 billion loss late last year stemming
from unauthorised trading by a London-based trader – who has now been
jailed for the offence – said it believes fourth-quarter results
attributable to shareholders will show a loss of up to SFr2.5 billion,
mainly as a result of the provision for litigation and regulatory issues stemming from this week's announcement.

The bank joins an increasingly long list of banks and other wealth
management institutions around the world that have been punished for
offences such as breaches of anti-money laundering rules, sales of
inappropriate products, interest rate manipulation, and other
transgressions. Last year, the-then chief executive of UBS, Oswald
Grübel, resigned and was later replaced by current CEO Sergio Ermotti.

Hong Kong

"In this connection, the HKMA has commenced an investigation with a
view to (i) ascertaining any misconduct committed by the bank in
relation to HIBOR submissions, and (ii) assessing whether the
misconduct, if substantiated, has any material impact on the HIBOR
fixing results," said the HKMA.

"The HKMA will follow up with the relevant overseas
regulatory authorities to gather relevant information concerning the
case and consider further actions that need to be taken in the light of
its investigation findings and any other relevant information that comes
to its attention," it said.