Monetary Authority investigates UBS over possible Hibor rate misconduct

Hong Kong's de facto central bank said it has begun investigating UBS for possible misconduct involving the setting of the city's interbank interest rate, raising fresh concerns that the Swiss bank faces more trouble.

The statement comes just a day after UBS agreed to pay US$1.5 billion in fines for its role in a scandal involving the London interbank offered rate (Libor).

The Hong Kong Monetary Authority said yesterday it was investigating the Hong Kong interbank offered rate (Hibor) submitted by UBS after receiving information from overseas regulators. It said it was "accessing whether the misconduct, if substantiated, has any material impact on the Hibor fixing results".

In a statement, the authority said the regulatory information also pertained to "other reference rates in this region".

David Webb, a shareholder activist and former investment banker, said: "If the Hibor rate was manipulated downward, residential Hibor-linked mortgage borrowers in Hong Kong would have benefited from the interest-rate manipulation, and vice versa."

He noted UBS was not the only bank involved in the interest-rate rigging scandal in the UK.