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Mitsubishi UFJ to Pay $30M to Resolve Yen LIBOR Rigging Case

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Mitsubishi UFJ Financial Group, Inc.’s MTU two units have agreed to settle the anti-trust case in the United States related to manipulation of the benchmark yen Libor and Euroyen Tibor rates. The news was reported by Reuters.

Mitsubishi UFJ, denying any wrong doing, will be paying $30 million for the settlement of the lawsuit that alleged it of conspiring with other banks to rig these benchmark rates. While the preliminary settlement documents were filed in the U.S. District Court in Manhattan last week, court approval for the same is still awaited.

Manipulation of Benchmark Rates

The lawsuit had alleged that more than 20 banks manipulated the benchmark rates from 2006 to at least 2010 to reap profits. The plaintiffs in the case include Hayman Capital Management LP, Sonterra Capital Master Fund and California State Teachers’ Retirement System.

Notably, in February 2016, one of defendants, Citigroup C became the first bank to settle the lawsuit by agreeing to pay $23 million. It was followed by Deutsche Bank DB, HSBC and JPMorgan JPM. In aggregate, these four banks paid roughly $206 million to settle the alleged charges. Other defendants include Barclays PLC and Sumitomo Mitsui Trust Holdings Inc., among others.

Libor or the London Interbank Offered Rate, an important benchmark set by the British Bankers’ Association, is used by the financial institutions across the globe to set the interest rates for lending purposes on several transactions. The Euroyen Tibor is a reference rate that is overseen by the Japanese Bankers Association.

Manipulation of such benchmark rates by financial institutions has triggered detailed investigations by regulatory bodies across Europe, Asia and America and has claimed billions of dollars as settlements and fines.

Our Take

The settlement of yen LIBOR rigging allegations is a step in the right direction for Mitsubishi UFJ. The company is already facing pressure on the bottom line owing to weak domestic economy. The negative interest rates in Japan will likely lead to muted revenue growth.

However, Mitsubishi UFJ’s efforts to expand through acquisitions will go a long way in supporting profitability. The company also remains focused on its business upgradation plan.

Over the last six months, Mitsubishi UFJ’s shares have rallied 15.9%, outperforming the industry’s growth of 6.6%.



Mitsubishi UFJ carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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