Swiss banking giant UBS (USBN: VX) has been hit with fines totalling £940m for its role in rigging the LIBOR rate - £160m of which was levied by the UK's Financial Services Authority (FSA).
Yet, despite dwarfing the £290m LIBOR-related fine levied against Barclays earlier this year, the bank's shares hardly budged on the news. There are good reasons for that. To begin with, a core tier--one capital ratio of 18.1 per cent leaves UBS as one the best capitalised lenders in the world - it's well able to absorb such hits. The bank is also working to wind down much of its fixed-income operations - that will dramatically cut costs, release capital and possibly allow the dividend payout to be significantly boosted. Credit quality looks good, too, with impaired loans representing just 0.5 per cent of the loan book.
