Independent research firm Autonomous's report has estimated that the bank will have to pay $8bn in fines. Photo: Bloomberg

Zurich and London - UBS shares fell yesterday following a research report which said the Swiss bank could have to pay $8 billion (R85bn) in fines and settlements relating to alleged collusion and price manipulation in the global currency market.

The report, published on Wednesday by independent research firm Autonomous Research, said foreign exchange settlements could cost banks $35bn, almost six times more than the $6bn in total fines paid in the Libor (London interbank offered rate) interest rate-rigging scandal.

Shares in UBS were down 1.9 percent at noon, a move traders in Zurich attributed to the report. Autonomous estimates it will pay $8bn, the biggest fine for any single bank. Next are the world’s two largest foreign exchange trading banks – Deutsche Bank with an expected $4.4bn fine, and Citigroup’s $4.3bn.

Autonomous, a research firm founded in 2009 and covering major European and US banks, based its estimates on the size of Libor fines, including those avoided for co-operation. It reckons the total FX (foreign exchange) fine pool will be at least double the Libor total, but capped at each bank’s annual profit level.

“We acknowledge that our methodology is speculative, but it applies the theory that repeated wrongdoing attracts higher penalties, as witnessed elsewhere,” the authors said.

UBS declined to comment, but a spokesman pointed to the first-quarter report, where it showed Sf1.778bn (R21bn) in provisions to cover all its legal difficulties.

Regulators around the world are investigating allegations that senior currency traders attempted to manipulate exchange rates. - Reuters